Ask Ed Slott: RMDs for Inherited IRAs?

My father recently passed away with an IRA at a credit union in 3 CDs. My mother is the sole beneficiary. They are both on an automatic RMD plan that takes the distribution in mid Dec of each year.†

The credit union plans to transfer my dadís CD amount to one of my motherís CDs and to take the RMD for both accounts from her IRA (contains 5 CDs in same credit union plus the addition of my dadís) in mid Dec this year as always.†Is there any problem with doing it this way?

After your dadís death, no RMDs should be paid using his Social Security number because the funds belong to the IRA beneficiary. Your mother can elect to treat your dadís IRA as her own and then take his RMDs from her IRA.

I have been told that beneficiary IRAs are not pooled with other non-Roth IRAs when it comes to the pro-rata rule on Roth conversions because the beneficiary IRA is considered to still be in the name of the decedent. Is this true?

Yes. Beneficiary IRAs are treated separately for purposes of the pro-rata rule from your own IRAs. Roth IRAs are treated separately from your own IRAs as well as any beneficiary IRAs.

Read more:

IRS Issues IRA Rollover Warning

Ask Ed Slott: IRA Recharacterization Limit?

How to Avoid 'Stealth' Taxes

Get access to this article and thousands more...

All Financial Planning articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.

Already Registered?

Comments (7)
I respectfully do not agree. I thought that an RMD must be taken by the beneficiary BEFORE the balance is distributed to any beneficiary. Since he had not taken his RMD yet for 2014, shouldn't that be taken first ? I agree that once she takes his IRA as her own, then going forward she would take the RMD on her combined total.

Is there an exception that allows the surviving spouse to take the combined RMD if the decedent had not taken his already ?

Posted by DAVID L Z | Thursday, June 19 2014 at 1:07PM ET
The way some firms handle this can be a little confusing. Some firms require a distribution of the RMD before transferring it to the beneficiary. But if you'll look closely at the paperwork, the RMD distribution is still being made in the name of the beneficiary. Our firm does it this way. So on the surface, it looks like it disagrees with what Ed says above. But the end result it just the same; it just looks like some firms are putting the cart before the horse!
Posted by Kristin R | Thursday, June 19 2014 at 1:50PM ET
A client passed away at age 57, having never taken a distribution from his rollover IRA. The beneficiaries are his 3 siblings, ages 48, 54 and 58. Are the siblings required to take distributions this year or can they wait until the deceased would have been 70 1/2?
Posted by Paul G | Friday, June 20 2014 at 11:08AM ET
Would love to see a response to Paul G's post, if possible - Thanks!
Posted by John M | Monday, June 23 2014 at 12:19PM ET
It is my understanding the options for distribution are to start lifetime distributions in the year after the year of death OR take all of the balance out of the account within 5 years. You'll have to double check as this is my general understanding of these rules.
Posted by Darlene P | Friday, July 18 2014 at 6:56AM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Already a subscriber? Log in here