Distribution/Liquidation Forms to Reregister an Inherited IRA? Also What if there are multiple IRA’, some spouse, some not.
Is it common practice for custodians to use Distribution/Liquidation Forms to Reregister an Inherited IRA?
While organizing the transitions after my father’s death, I’ve received two such forms and have been assured by the funds that they are the correct ones. I just don’t want anything deemed a distribution and certainly don’t want anything liquidated!
And here’s a tricky one. Is the RMD for the year of death calculated by combining all IRAs, including those inherited by the spouse as well as those inherited by adult child designated beneficiaries?
Permalink Submitted by Alan - IRA critic on Wed, 2021-06-30 04:01
The year of death RMD can be satisfied with any combination of amounts distributed to beneficiaries. It is not necessarily proportional since in cases of multiple beneficiaries there is usually one or more than want to take a distribution anyway, and any such distribution is applied against the year of death RMD. Should no beneficiary wish to take a larger distribution than the RMD, then the simplest approach is to pro rate the year of death according to how much each beneficiary inherited regardless of whether one of them is the spouse. The spouse may want to do the spousal rollover, or wait until 59.5 if under 59.5.
As for the form you mentioned, it sounds like they are not the correct forms to simply retitle the IRA as inherited or to create separate inherited IRAs for each beneficiary. You are correct to avoid signing anything that even suggests a distribution, or attach a letter indicating that there is to be no actual distribution to beneficiaries (other than the year of death RMD which is typically not distributed until after separate inherited IRA are established under each beneficiary’s SSN. As you are probably aware, there is no fix or rollover allowed once a check is issued to a beneficiary.