Inherited Inherited IRA
My father died in 2005 and I inherited an IRA from him. I started taking RMDs in 2006.
My brother got a portion of our father’s IRA as well and my brother took his 2006 RMD from that inherited IRA just a week before he died at the age of only 45 last year.
I then inherited 50% of that IRA from my late brother (with our other brother getting the other 50%).
Now I have an inherited traditional IRA that I got directly from my father in addition to this traditional IRA that I inherited from my brother who inherited it from my father.
I assume that when taking RMDs, I have to take them separately from each IRA even though both are from my father? (I know I could combine RMDs if I’d inherited multiple IRAs directly from my father, but I assume the fact that my brother owned the inherited IRA for a short time makes that impossible.)
I also wanted to clarify what divisor I use. My brother used a life expectancy of 38.8 for his 2006 RMD. As I understand it I then would use 37.8 to calculate the RMD this year and then just take off one with each passing year to continue the schedule he was on.
This is a negative for me as my life expectancy is 49.4 (I turned 34 this year). Though this is a positive for our brother who got the other half — he gets to use 37.8, even though he’s 54).
This I guess would demonstrate why Mr. Slott emphasizes the importance of naming beneficiaries on your inherited IRAs — they can potentially have lots of owners and live on after multiple owners are dead.
Karl
Permalink Submitted by Alan Spross on Fri, 2007-11-02 04:03
I agree with your interpretations posted.
First, following is a copy from the IRS Regs with respect to when you can aggregate beneficiary RMDs. In your case, you inherited the two IRA accounts from different decedents even though the accounts had the same original owner. In addition, while not a material requirement, the RMD divisor is different, so I would refrain from taking an overly aggressive position that you inherited both from the same ORIGINAL decedent. You technically were not a beneficiary on that IRA or separate account of the original owner, but apparently a successor beneficiary named by your brother.
REGS:
” However, amounts in
IRAs that an individual holds as a
beneficiary of the same decedent and
which are being distributed under the
life expectancy rule in section
401(a)(9)(B)(iii) or (iv) may be
aggregated, but such amounts may not
be aggregated with amounts held in
IRAs that the individual holds as the
IRA owner or as the beneficiary of
another decedent. ”
Your 37.8 divisor is correct as it continues to RMD schedule of the original non spouse beneficiary, and should be reduced by 1.0 each year,
Permalink Submitted by Denise Appleby on Fri, 2007-11-02 07:27
A good example of the Stretch/Multigenerational IRA that was recently discussed in another post.