I have a client that inherited a Traditional IRA, a SEP IRA, and a Roth IRA. The account owner (same on all 3 accounts) passed away in May of 2022 he was 76 and therefore past his RBD for RMDs. These accounts were held at another Broker/Dealer, not mine. We just received money into her established Beneficiary IRA (former B/D combined Traditional and SEP into one IRA) for the total of the Traditional IRA and SEP IRA combined as one (no problem as those 2 types of accounts can be combined/comingled). The Roth IRA was liquidated fully by the beneficary (my client) early in 2023 and processed by that other B/D. To the best of my understanding, the owner had originally inherited all three IRAs from his spouse. He used the Spousal exemption and made the IRAs his fully and not beneficiary IRAs. It is also my understanding, from piecing together very fractured information and next to no information from previous B/D, that the last owner did NOT designate beneficiaries and therefore went to his Estate first. Following those facts, it should be that my client’s RMD will be based on the deceased Owner’s life and not the 5 year rule. I come up with an RMD factor of 14.1 for 2022 (based on Owner’s age) and therefore 13.1 for 2023, 12.1 for 2024, etc.

Here is the main issue I’m having. The previous B/D told my client, who was the beneficiary of all 3 accounts, that the full distribution from the Roth IRA could be counted toward her RMD in 2023 for the traditional beneficiary IRA and therefore reduce the amount she must take from the Traditional Bene IRA we established for her. My belief, of course, is that Bene Roth IRA distribution has no effect on the RMDs that must be taken from the combined Traditional and SEP Bene IRA. My client is adamant, but can’t show me the rule anywhere and I’ve researched until I’m blue in the face and found no reference to being able to count an RMD from a Bene Roth IRA toward RMDs from traditional bene IRAs. Of course my B/D won’t comment at all because they feel they don’t have enough data they can call fact… so given we are rapidly approaching the end of the year, I’m looking for clarification so I take the RMD that the IRS would actually demand of my client. To compound issues, we can’t determine if an RMD was taken in 2022 for the amount the owner should have taken in that year. We just got the funds a few days ago and time is running out for 2023. Can anyone help me clarify her RMD for 2023?