Q. We inherited an already inherited IRA. It originally was my late brother-in-law’s. He passed away before 70 and left it to his wife, my sister, when she was 54. She passed away at age 56 and had no one listed as beneficiary. My mother was next of kin so she inherited everything. What are our choices for taking distributions for this inherited IRA from our late mother? We would like to spread out RMDs, if possible.
— Figuring it out
A. We’re sorry to hear about the loss of your family members.
When it comes to inherited IRA accounts, there are not really many choices.
First, make sure the title of the account is correct to ensure Required Minimum Distribution (RMD) calculations are based off of the correct life expectancy, said Paul Criscione, a certified financial planner with Freedom Capital Management in Colts Neck.
In this case, it would be something like “Brother-in-law, deceased, IRA f/b/o Mother, successor beneficiary of Wife,” he said.
RMD calculations cannot be reset when a successor beneficiary inherits an inherited IRA, Criscione said.
“Your mother cannot use her own age to calculate RMDs on the IRA that originally belonged to her daughters’ husband,” he said. “When the daughter (wife) inherited the IRA, her life expectancy factor, age and account value determines the RMD until the account is emptied.”
And, Criscione said, the life expectancy factor gets reduced by one each year regardless of who might later become a successor beneficiary of the inherited IRA.
Learn more about how it works here.
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