By Andy Ives, CFP®, AIF®
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If I have the beneficiaries on my IRA listed as my wife (50%) and two children over 21 (50%), is my wife still able to move her half of the IRA into her existing IRA when I am gone? Or does having the adult children as partial beneficiaries inhibit her ability to do a spousal rollover to combine it with her existing IRA?
As long as your IRA is timely split after your death, your wife will still be able to complete a spousal rollover into her own IRA. This is often referred to as “separate accounting.” The deadline for your beneficiaries to set up separate inherited IRA accounts is December 31 of the year after your year of death. If that happens, your wife can do a spousal rollover. However, if this deadline is missed, your wife would not be permitted to do a spousal rollover and would be required to maintain the account as an inherited IRA.
I hope you can help me, please! I just inherited an inherited IRA from my sister who had inherited the IRA from her fiancé. There were only 4 years difference in age between my sister and I, but I am unsure of the age of her deceased fiancé. How do I determine if I’m an Eligible Designated Beneficiary or just a Designated Beneficiary? And whose age do I use to determine the RMD requirements?
Any help/direction you can provide would be greatly appreciated!
Since you are inheriting an inherited an IRA, that makes you a successor beneficiary. I will assume your sister was taking stretch required minimum distribution (RMD) payments from the inherited IRA based on her own single life expectancy. As a successor, you will continue this exact same RMD schedule, using the same RMD factor that your sister was using. Essentially, you will step into her shoes for future RMD payments. Additionally, since you are a successor beneficiary, the 10-year rule also applies. So, continue RMD payments in years 1 – 9, but the account must be emptied by the tenth year after the year your sister’s death.