Inherited IRA questions

Submitted by Neal Gordon on Fri, 2023-10-06 17:36

Father, age 85, dies in Feb 2023 without taking RMD due in 2023. Son is Beneficary on 2 of 3 IRA’s & the other has no beneficiary.

What is the RMD that wasn’t taken yet yet for this year based on – Deceased’s actual RMD due or the inherited’s life expectancy table? Please confirm that this should fit the 10 year rule with RMD’s.

For the IRA that has no bene listed, can the Executor of the estate have the funds transfered to an Inherited IRA? What would the RMD obligations be bsed on for this account? If this can be transfered to inherited IRA, Please confirm that this should fit the 5 year rule with RMD’s.

I also assume that I should not comingle the Inherited IRA from named beneficiary with the Inherited IRA from the account without named bene.

Thanks



Submitted by Alan - IRA critic on Fri, 2023-10-06 20:11

  • The 2023 RMD is the amount that father was required to distribute. The RMD for the IRAs with named beneficiaries can be completed in any combination between those named beneficiaries, but the RMD for the estate IRA must be made to the estate.
  • If son is not disabled and the sole beneficiary of the two IRAs, the 10 year rule will apply and annual beneficiary RMDs are required in years 1-9 (2024-2032) based on son’s age in 2024. That divisor is then reduced by 1.0 each year thereafter. These two inherited IRAs can be combined if desired as long as father was the owner of both (not the beneficiary).
  • For the estate IRA, the 10 year rule does not apply, and annual RMDs are based on father’s remaining life expectancy. Use the divisor for the age father would have been at the end of 2023 and reduce that divisor by 1.0 for 2024 and each year thereafter. The estate executor can assign this IRA out of the estate to the beneficiaries of the estate, but that does not change the annual beneficiary RMD.
  • Correct, that the estate inherited IRA or those assigned out of the estate cannot be combined with the other 2 inherited IRAs. Also, note that the 5 year rule only applies when the owner passes prior to his RBD.


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