Again, Inherited IRA Question

[Guest IraSue]

I searched for and read the archived messages of the recent past about inherited IRAs... Seems to be a continuing trouble spot. So here we go again....

I have this situation: Mother with Trad. IRA dies in 1999, RBD was 4/1/1994. No living spouse. She named her two children as primary beneficiaries. Each child has taken RMDs each year starting in 2000. Now one beneficiary wants to transfer her portion to another custodian. Our organization cannot and would not open an IRA for a deceased person. I know PLRs have clearly stated a beneficiary cannot rollover his or her portion, however, ttee to ttee transfers are permitted.

Does this mean the transfer can be made to an IRA in the decedent's name that was preexisting at death (another inherited IRA) or are there custodians out there who will open an IRA in the name of a decedent?

Our policy now is we will do the transfer provided the new custodian acknowledges the IRA is in the decedent's name and that they will accept the inherited IRA. We also require the beneficiary to execute a hold harmless letter since our position is that this is a grey area with the IRS and we believe the transaction is not approved by the IRS.

Can anyone enlighten me further on this issue? Any information is greatly appreciated. Thank you.

[Guest Derelict]

Seems like you have it all right

Xfers between like accounts (Jane as Bene of John's(Dec'd) IRA -> Jane as Bene of John's (Dec'd) IRA) is permitted and most custodians will allow these to occur although some may require more paperwork than others.

It should never go back into the decedent's IRA nor should any new accounts be opened in the name of the deceased. (Although I do believe there are PLR's where a wife bene has done so iirc.)

Nothing in the code prohibits the transfer although each custodian may have certain restrictions and requirements on the delivery and receipt of these types of accounts.

- D

[Appleby]

I agree with Derelict.

The current IRAs should already be registered as Derelict indicated above. Different custodian uses different styles/format—any style of registration is acceptable, providing the title includes the name of the deceased and the name of the beneficiary, and the TIN of the beneficiary. The key is to show that the IRA once belonged to the deceased.