Inheriting a Non-Spousal Inherited IRA
Brother (age 46) passed away in Oct 2017, mother was named as beneficiary for brother’s pension. We opened Non-Spousal Inherited IRA in her name early 2018, her age at the time 76. RMD was taken for 2018 & 2019. She passed away this year at age 78. Dad at the age of 80 is named beneficiary. When dad opens his IRA is this still considered a Non-Spousal Inherited IRA since original funds came from my brother? Or is it now just an Inherited IRA? When dad opens his IRA, how is the IRA titled? And how is the RMD now figured out?
Permalink Submitted by Alan - IRA critic on Thu, 2020-04-16 14:29
It is still a non spouse inherited IRA. A non spouse inherited IRA cannot later be rolled over by any subsequent beneficiary. Dad’s inherited IRA should be titled “(dad) as beneficiary of (mom)” of similar. Brother’s name is dropped from the title. Dad inherits subject to the new rules of the Secure Act, which means the 10 year rule will apply to him. He does not have annual beneficiary RMDs, but the inherited IRA must be drained by 12/31/2030. There is also no 2020 RMD for Mom required since all RMDs for 2020 are waived. While Dad has no annual RMDs, if the balance is considerable, he may wish to still take annual distributions to avoid a lump sum at the end of the 10 year period for Dad or Dad’s beneficiary. And 2020 may be his lowest tax rate because it is the last year he can file jointly.