RMDs after inherited IRA bene dies

[Bird]

Mr. X has his own IRA, is receiving RMDs on that, and is receiving distributions as a beneficiary of an inherited IRA from his father. 

He passes away in 2023. His wife gets part of both IRAs and his niece gets part of both.

Someone decided it was ok to combine the personal IRA proceeds and the inherited IRA, and set up one IRA for the spouse and one for the niece. Is that ok? I'd think that the inherited IRA has to continue at the payout method set up, so if the spouse claims the new commingled IRA as her own, that would be stretching out the inherited IRA payments longer than they otherwise should be. The niece's part would probably be ok under the 10 year rule although I'm not sure what the remaining payout period was on the inherited IRA so maybe not.

I appreciate any thoughts. I'm not sure I've seen a situation with the death of an inherited IRA beneficiary but it doesn't seem like you should be able to ignore the original payout method on it.

[Bird]

bumping this; someone must have thoughts...?

[Peter Gulia]

It’s regrettable that an IRA’s beneficiary let a custodian combine accounts with different histories and attributes.

(Did the beneficiary, whichever one is your advisee, assent, expressly or impliedly, to the combination of accounts? Has the time for objecting to an account statement or transaction confirmation run out?)

An adviser might warn one’s advisee that an individual remains responsible for correct minimum distributions, even if a custodian’s accounting no longer provides needed information.

Yet, an adviser who’s comfortable with full-picture counseling might explain also that the IRS has little resources to detect mistakes in the amounts of minimum distributions.

An adviser would provide advice that fits with one’s professional conduct.

This is not advice to anyone.

[Appleby]

On 7/31/2024 at 9:02 AM, Bird said:

Mr. X has his own IRA, is receiving RMDs on that, and is receiving distributions as a beneficiary of an inherited IRA from his father. 

He passes away in 2023. His wife gets part of both IRAs and his niece gets part of both.

Someone decided it was ok to combine the personal IRA proceeds and the inherited IRA, and set up one IRA for the spouse and one for the niece. Is that ok? I'd think that the inherited IRA has to continue at the payout method set up, so if the spouse claims the new commingled IRA as her own, that would be stretching out the inherited IRA payments longer than they otherwise should be. The niece's part would probably be ok under the 10 year rule although I'm not sure what the remaining payout period was on the inherited IRA so maybe not.

I appreciate any thoughts. I'm not sure I've seen a situation with the death of an inherited IRA beneficiary but it doesn't seem like you should be able to ignore the original payout method on it.

No. That is not OK.
Those beneficiary accounts must be kept separately- particularly because the RMD calculations are different, and because that is the regulatory requirement.

His wife should have two IRAs.

(1) A beneficiary IRA for the one he inherited from his father. Registered in her name and her husband's name.

(2) An IRA with the amount she inherited from her husband's own IRA. She can move this to her own IRA, or to a beneficiary registered in her name and her husband's name.-her advisor should advise which of the two is more suitable for her.

His niece should also have two IRAs.

(1) A beneficiary IRA for the one he inherited from his father. Registered in her name and her uncle's  name.

(2) A beneficiary IRA for the amount he had in his own IRA- that too should be registered in her name and her uncle's name.

They should contact the IRA custodian and have them fix these errors.

[Bird]

ok thanks