Inherited IRA from Spousal inherited IRA
We have a client that inherited an IRA from his deceased wife this year. This IRA was originally inherited by her from her father (pre-2020). We are having issues with the contra firm noting the new account correctly to accept the transfer. Can you please confirm the treatment of the newly (twice) inherited IRA? Thank you
Permalink Submitted by Alan - IRA critic on Mon, 2022-05-02 23:06
Custodians vary as to inherited IRA titling. Generally, the preferred format would show client as beneficiary of wife (their names). The name of her father can be dropped, but is also OK if the custodian wants to include all 3 parties (eg client as beneficiary of wife as beneficiary of her father). The newest custodian may have to set the title up the same as the former custodian if the direct transfer is blocked by the titling. It a few cases, these two custodians may have to communicate to get the transfer done.
Client cannot roll this inherited IRA over to their own or assume ownership of it. Client will be subject to the new 10 year rule, but depending on the new proposed Regs may also need to take annual RMDs if her father passed post RBD. Those annual RMDs would be composed of completing his wife’s beneficiary RMD schedule. For this year client must complete wife’s beneficiary RMD if wife did not complete it before passing.