Traditional IRA and a Spousal Inherited IRA

Submitted by George McCabe on Fri, 2020-04-17 18:15

A client took out two RMD’s after Feb 1: one from her traditional IRA and another from her spousal Inherited IRA. Does she have the ability to rollover both distributions back into each IRA? Thanks.



Submitted by Alan - IRA critic on Fri, 2020-04-17 18:28

  • No, because the one rollover limit applies to all IRAs whether owned or inherited. However, client could roll back the TIRA distribution and roll the inherited IRA distribution to a Roth IRA because a conversion does not count against the one rollover limit. The converted distribution will still be taxed, but client would be better off with a Roth IRA than with a taxable account balance. If these two distributions were of different amounts, client could roll the larger one back and convert the smaller one.
  • On another subject, If client has RMDs from both, she is over 70.5 and should have rolled the inherited IRA into her own IRA. Her RMDs (once RMDs resume in 2021)  are much lower on owned IRAs (Table III) than on inherited IRAs (Table I). This would also be simpler to deal with every year.

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