Inherited IRA and Traditional IRA Req Min Dist.

[BulldogTom]

Please check me on this, because it has been a while.

TP is 79. Spouse is 77. Son, age 54 passed away last April and left retirement plan to parents. Designated beneficiaries on the plan docs. They rolled the plan to an inherited IRA. They are taking withdrawals from TP IRA that exceed minimum requirements.

Balance of Traditional IRA is approx 120K

Balance of Inherited IRa is approx 150K

My take:

They may not aggregate the amounts. RMD must be taken from each account.

They must use the Single Life Table using the oldest beneficiary (TP age 79) for the factor (10.8) on the Inherited IRA. Next year factor is 9.8, then 8.8, etc.

They use the Uniform Life Table for the Traditional IRA.

They did not have to take a 2012 RMD from the Inherited IRA

They must take the RMD in 2013 from the Inherited IRA

If they do not take RMDs from the inherited IRA, they must take all the funds within 5 years.

Am I missing anything?

FYI, taxpayer brought in the 1099R with code G for the rollover into the Inherited IRA. When I asked him about the RMD on it, he said the IRA Plan advisor told him they had plenty taken out from the traditional and not to worry about it. I begged him to go back and double check, which he did. Now the advisor is saying they need to take both 2012 and 2013 RMD in 2013. I think that is wrong. I think as I have laid it out above is correct.

Financial advisor wants to talk to me.

Thanks for double checking on me.

Tom

Hollister, CA

[jainen]

>>the IRA Plan advisor told him they had plenty taken out from the traditional and not to worry about [the inherited IRA].<<

Quickfinder points to an IRS Q&A in Reg 1.408-8. "Only amounts in IRAs that an individual holds as the IRA owner may be aggregated. 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."

I would tell the client that I am uncomfortable with the concept of "plenty." Ask the financial advisor to provide the specific dollar amounts that support his conclusion. So far I can only follow the count on the inherited distribution up to zero, but at least that's a concept I do understand.