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Inherited IRA RMD

Situation is that 90 year old decedent's IRA beneficiary is a family trust which has three children named as beneficiaries.

One lawyer says that the three trust beneficiaries can establish inherited IRAs, that the trust takes the current year RMD (year of death), and that each child starts taking RMD next year using the decedent's life expectancy, minus one, from IRS Pub 590 Table III. This lawyer appears to be fully consistent with IRS Pub

590.

Second lawyer says each beneficiary can establish inherited IRA, that the Trust takes the current year RMD (year of death), but that each child then starts taking RMD next year using the life expectancy of the OLDEST of the beneficiaries rather than of the decedent. I have no idea what this latter opinion might be based upon. Any ideas on which interpretation is correct, and what the second opinion might be based on?

Regards, Dan

Reply to
Dan Schumacher
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You referred to Pub. 590. It's not clear whether you are aware that Pub. 590 has been split into two separate publications this year. Pub. 590-A covers contributions, including rollovers and conversions. Pub. 590-B covers distributions, including RMDs and beneficiaries.

The second lawyer is correct. His opinion is based on the rules for "multiple individual beneficiaries" in Pub. 590-B, page 12, at the bottom of the left column. The first lawyer assumed that the IRA would be split into separate accounts for each beneficiary, but Pub. 590-B, page 12, has the following note at the bottom of the right column.

"Note. The separate account rules, discussed earlier, cannot be used by beneficiaries of a trust."

Bob Sandler

Reply to
Bob Sandler

Bob,

Thanks for your reply. I am aware of the split into A and B for IRS Pub 590, and I am certain you are correct in your guess that the first lawyer assumed creating multiple inherited IRAs because of the way another professional phrased the question to him.

Not splitting the decedent's IRA will probably cause some administrative hassle, but the worst case is we split the IRA into three and forego the extended withdrawal period.

Regards, Dan

Reply to
Dan Schumacher

Bob (or anyone else with a thought),

I thought that I understood this all, but now notice that in order for the "Multiple Individual Beneficiaries" section to apply, that "The account or benefit has not been divided into separate accounts or shares for each beneficiary." If three separate inherited IRAs are created for the three trust beneficiaries, would that not preclude the use of the Multiple Individual Beneficiaries rules just as the Separate Accounts rules can't be used because they were the beneficiaries of a trust? If this is true, what would be the guiding rules for determining the RMD for each inherited IRA?

Regards, Dan

Reply to
Dan Schumacher

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