Inherited IRA
In 2018, I inherited 2 IRAs, one from my father and one from my mother. Both died in 2016, but the IRAs were not distributed to me and siblings until June 2018. In 2017, the estate of my mother withdrew RMDs from both IRAs and paid taxes. In 2018, we siblings/inheritors set up Inherited IRA accounts to receive our portions of the 2 IRAs.
So 2018 is the first year that i have possession of the 2 IRAs. I know I am required to take the RMDs and pay taxes. How do I calculate the RMD rate – from the life expectancy table based on my age? FYI I am the oldest of the siblings.
Thank you for your assistance.
Permalink Submitted by Alan - IRA critic on Tue, 2018-12-18 23:51
Need more info because your RMDs depend on detailed past information regarding both inherited IRAs. Sounds like your mother inherited your father’s IRA, but did not name a beneficiary on either her own IRA or the one inherited from your father, therefore they were both inherited by her estate. Please correct anything in the prior sentence that is incorrect. Also please provide their dates of birth and death unless both passed at age 72 or later. All that is clear so far is that you will not be able to use your own life expectancy for RMDs since you were not directly named on the IRAs as beneficiaries. Due to the same details, it is quite likely that mother’s estate did not calculate the RMDs they distributed to the estate correctly. The estate needed to distribute any 2016 RMDs not completed before death for each parent, and the correct beneficiary RMD for 2017, and those distributions will be passed through to each beneficiary on Form K 1 issued by the executor’s tax preparer. You will probably receive those K 1 forms next year if the estate is now closed.
Permalink Submitted by Glenda Neff on Thu, 2018-12-20 19:07
Thank you very much for the info that I cannot use my life expectancy to calculate the RMDs.Yes — ” Sounds like your mother inherited your father’s IRA, but did not name a beneficiary on either her own IRA or the one inherited from your father, therefore they were both inherited by her estate.” That is correct.Father dob 05/31/26 dod 03/01/16 Mother 11/17/25 dod 09/20/16
Permalink Submitted by Alan - IRA critic on Fri, 2018-12-21 00:49
Due to their ages, there is a very limited stretch. Mother’s owned IRA should have had an RMD divisor of 4.2 for 2017, 3.2 for 2018, 2.2 for 2019 etc reducing by 1.0 each year. For the inherited IRA from your father, the divisor for 2017 should have been 4.9, then reduced by 1.0 each year thereafter.
Permalink Submitted by Glenda Neff on Mon, 2019-01-07 23:28
Thank you very much for helping me understand this, Alan. And sorry for this delayed thank you!The financial institution holding the inherited IRAs did tell me just before xmas (so I took correct RMDs before 12/30) that I had to use mom & dad’s life expectancies to calculate the RMD. Lucky (?!) for me, I have limited income this year and will have no income over the next few years, so hope the taxes will not be too high.