My wife’s father, age 97, passed away in 2021. She is a beneficiary of part of both his traditional IRA and his 403(b). She intends to roll both into an inherited traditional IRA. Since both inherited IRA accounts fall under the 10 year rule to empty the account(s), I’m wondering whether there are any reasons not to combine both into a single inherited IRA. Her intention is to name the same beneficiaries whether one or two IRAs are established.
While the RMD was distributed, it was after the participant’s death and therefore the plan beneficiary should be in receipt of the distribution and the 1099R as well. Perhaps this is most easily addressed through the nominee process in which the amount is both reported and deducted on the decedent’s final return and then paid and reported by the beneficiary. That would eliminate involving the plan and/or attempting to return the check for proper reissue. The IRS does not care who received the RMD as long as it was distributed and taxes paid. More serious issues can occur if the plan beneficiary has a right to the distribution and has not received it.
Permalink Submitted by Alan - IRA critic on Sun, 2022-01-30 18:50
They can be combined since they were inherited from the same original owner and both will fall under the 10 year rule. Be sure she requests a direct rollover of her share of the 403b to an inherited IRA, and the IRA must also be moved by direct transfer so she needs to avoid requesting a distribution. If father did not complete his 2021 RMDs before passing, those RMDs must be distributed in some combination to the beneficiaries. If this was not done in 2021, those RMDs will be late and a Form 5329 must be filed to request that the penalty be waived. The year of death RMD issue usually requires some coordination between the beneficiaries.
Permalink Submitted by Bob Keller on Sun, 2022-01-30 20:51
Thanks for your reply to my question.Your mention of RMDs brings up another question. The IRA distributed her dad’s 2021 RMD before he passed. He had requested his 403B custodian to distribute the RMD on November 30th, which is what happened. Her dad died in early November. So Dad “completed” his requests for both RMDs but received only the IRA RMD before he died. I realize the 403B 1099R shows the year of distribution but not the exact date of distribution, so is my question here academic/moot?