I am about to inherit an ira my Mom inherited from my Brother and would like to know my required RMDs.
Here are the details:
Me: Born 11/10/1955
Mom: Born 2/22/1922 Died: 10/13/2020
Brother: Born 6/8/1942 Died 5/12/2017
Thank You
You are referring to a 2017 article, but the Secure Act made major changes to the beneficiary RMD rules. Secure became effective 1/1/2020, long after this article was published. Sec 401 of the Secure Act addresses deaths of designated beneficiaries after 1/1/2020, and the 10 year rule applies. This is in your favor for the reasons stated.
Permalink Submitted by Alan - IRA critic on Fri, 2021-01-08 15:05
The recently passed Secure Act changes the former RMD requirement that you simply continue the RMD schedule your Mom was using based on brother’s life expectancy because he was younger than Mom. With the changes, you are subject to the 10 year rule. That means you have no annual beneficiary RMDs, but you must drain the inherited account by 12/31/2030. This law change actually gives you a very short added distribution time, but more importantly you have complete discretion over the amount you wish to distribute each year until 2030. You should avoid waiting until the end if that will increase your marginal rate in 2030.
Also, a beneficiary is responsible for completing the year of death RMD if that was not done. However, because all 2020 RMDs were waived by the CARES Act, you do not need to be concerned with this issue.
IRA custodians use different formats for retitling already inherited IRAs. The IRS recommendation in your case would be to list you as the beneficiary of Mom, dropping the name of your brother from the title. But if they want to show his name as original owner as well, it is not a problem. Be sure to name your own beneficiary when you have the account retitled.
Finally, you cannot take any distribution and do a rollover. You can only move the funds by a direct IRA to IRA transfer, which is non reportable on your return. Therefore, if you have the IRA retitled at the present firm in beneficiary format, if you want to transfer it to your own IRA custodian, you can open a similarly titled inherited IRA at your own IRA custodian and provide them with the info for them to transfer over the account. Note that IRA custodians do not particularly like inherited IRAs as much as owned IRAs, so if you get a lukewarm reaction from your IRA custodian, that’s the reason.
Permalink Submitted by Richard Meloni on Fri, 2021-01-08 15:56
Alan-iracriticBelow is an article written a while back from Ed Slott I believe contradicting your answer. I would very much like to hear your reply cause for obvious reasons I would like to keep inherted ira and have 10 years to withdraw vs what I interpret in his article..Thanks! Inheriting an Inherited IRA | Ed Slott and Company, LLC (irahelp.com)