Personal Investment & Financial Planning Q`s/Inherited Traditional IRA


Hi Gregory,
My father died mid-October 2013 and I inherited a traditional IRA from him.
Financial institutional holding his IRA advised this week that Required Minimum Distribution for 2013 had not been withdrawn because the holder had died during the year..  They said the IRA would be transferred to me as an inherited beneficiary IRA and at that time the 2013 distribution would be made based on my age and I would be responsible for the taxes for 2013.  Is this correct??
I have a traditional IRA and would like to transfer/rollover this inherited IRA to my IRA.  The investment company holding my IRA advised that I could not do this and would have to open a new IRA with this inherited money.  Is this correct?

Thanks, Ernest

Ernest, I'm sorry for your loss.  Inheritors of IRA's generally fall into one of three categories: 1. Spouse; 2. Non-spouse; 3. Entity (such as a Trust).  

Based on the wording of your question, it sounds as though your Dad was older than 70.5 at death.  In that case--yes--as a non-spouse, and based on the fact that your Dad had yet to satisfy his RMD for 2013, then your first year RMD should be based on the amount he would have had to take.  

For the years thereafter, as a Non-Spouse, the IRS (paraphrased below) stipulates the following:

"Individual beneficiaries other than a spouse can calculate RMDs using the distribution period from the Single Life Table based on:

If the owner died after RMDs began, the longer of the:

--beneficiary's remaining life expectancy determined in the year following the year of the owner's death reduced by one for each subsequent year or
--owner's remaining life expectancy at death, reduced by one for each subsequent year"

Finally, you will need maintain two separate accounts: one for the inherited IRA so the above calculations can be done each year; and the other should remain separate as your own Traditional IRA.  

Please be advised that this response is provided as general information and should not be construed as tax or legal advice.

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Gregory Ostrowski


Expert in the field of personal finance, investing and retirement planning. Cannot respond to questions on specific investments, nor provide tax or legal advice.


CERTIFIED FINANCIAL PLANNER™ Practitioner & Chartered Retirement Planning Counselor™ 12 Years Experience and Partner of Scarborough Capital Management, a Registered Investment Advisory firm managing approximately $1.2 billion in retirement assets for individuals across the United States

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