Beneficiary IRA withdrawal rules

[farmerEd]

A question please: if you have more than one IRA that you need to make RMD's from, do you need to take it proportionally from each of them, or is it just that the net amount needs to be taken from any of the accounts.

We have several, at different firms and need to make some decisions before the end of this year for the first time - if it makes a difference, some of these are inherited IRA's.

[travelover]

Dunno, but this is the best book I've seen on the subject.

Amazon.com: The Retirement Savings Time Bomb . . . and How to Defuse It: A Five-Step Action Plan for Protecting Your IRAs, 401(k)s, and Other RetirementPlans from Near Annihilation by the Taxman (9780143113362): Ed Slott: Books

[Animorph]

In general it's the total results that matters, not the individual accounts. That's about it for my expertise. However, I would think your inherited IRA's would be separate from the others, depending on how they are being held. And of course, since you said "we", IRA's are individually held and RMD calculations apply only across accounts held by that one individual. So you might have 3+ different RMD's.

[FinanceDude]

The IRS allows you to take ALL RMD's from one IRA if that is what you want. However, I heard from an IRS agent himself (HS buddy) that the IRS looks at inherited IRA RMDs closer than others. I would take the RMD from any inherited IRAs out of their respective IRAs.

[MichaelB]

Quote:

Originally Posted by farmerEd A question please: if you have more than one IRA that you need to make RMD's from, do you need to take it proportionally from each of them, or is it just that the net amount needs to be taken from any of the accounts. We have several, at different firms and need to make some decisions before the end of this year for the first time - if it makes a difference, some of these are inherited IRA's.

The IRS only cares about the total, not which IRA it came from. If you choose to draw "unevenly", make sure that the custodian doesn't do an automatic withdrawal that would leave you with excess withdrawal.

[GrayHare]

Note that you cannot take the RMD from one IRA if you have inherited both a Traditional IRA and a Roth IRA. In that case, the RMD must be calculated separately for the Traditional and Roth, then the RMD taken from each corresponding IRA type. And, yes, an RMD must be taken from a Roth if it is an Inherited Roth; the first such distribution must be taken by the end of the year after the year of the decedent's death.

[FinanceDude]

Quote:

Originally Posted by GrayHare Note that you cannot take the RMD from one IRA if you have inherited both a Traditional IRA and a Roth IRA. In that case, the RMD must be calculated separately for the Traditional and Roth, then the RMD taken from each corresponding IRA type. And, yes, an RMD must be taken from a Roth if it is an Inherited Roth; the first such distribution must be taken by the end of the year after the year of the decedent's death.

OP did mention any Roths are involved..........

[kaneohe]

I would check at fairmark.com or bogleheads.org. Alan S. seems to
live at both places these days. My impression is that your own IRAs get treated differently than inherited. You can combine within a group....like your
own IRAs but need to treat inherited separately, and, I think.........you have to treat the inherited as separate groups if you have inherited from different folks so you could have more than 2 RMDs. The calculation of personal vs inherited RMDs is probably slightly different.

[Sarah in SC]

Quote:

Originally Posted by kaneohe I would check at fairmark.com or bogleheads.org. Alan S. seems to live at both places these days. My impression is that your own IRAs get treated differently than inherited. You can combine within a group....like your own IRAs but need to treat inherited separately, and, I think.........you have to treat the inherited as separate groups if you have inherited from different folks so you could have more than 2 RMDs. The calculation of personal vs inherited RMDs is probably slightly different.

This is correct. Unless the inherited ones are from a spouse.

[kaneohe]

Quote:

Originally Posted by Sarah in SC ............... Unless the inherited ones are from a spouse.

thanks for adding that......I keep forgetting.........in which case they can be treated either as your own or as inherited w/ the corresponding consequences in RMDs, right?

[MichaelB]

I cannot find anything in pub 590 that affirms that RMDs must be taken separately from traditional and beneficiary IRA's. Can someone link to a source for that?

[Sarah in SC]

Oh, the complications...
OK, this is probably easier if you have the exact situation for a given person, but here goes:
If the decedent dies after they've started taking their RMDs, you have to take it on their schedule. If they hadn't, then it can be on your life expectancy. That's why you usually have to separate these out. And inherited Roths have to do RMDs as well.

On spousal rollovers, you just treat it like your own, even to the point of moving the funds into your own account, if you wish. Then it obviously follows your own schedule.

All your own traditional/rollover IRAs are treated as one account by the Feds, so it doesn't matter from where you take the RMD.

Holler with specifics and I can look it up.

[kaneohe]

Quote:

Originally Posted by MichaelB I cannot find anything in pub 590 that affirms that RMDs must be taken separately from traditional and beneficiary IRA's. Can someone link to a source for that?

google is your friend ....searched for this
https://www.google.com/#hl=en&cp=33&...w=1011&bih=670

from here: Avoiding Mistakes In Required Minimum Distributions (RMD)
found this:
Combining RMDs Must Be Limited to the Same Type of Retirement Plan
If you have multiple retirement accounts, you are allowed to combine and withdraw the multiple RMDs from one retirement account; however, only RMDs from certain types of retirement plans can be combined. The following combinations are permitted:

If you have multiple Traditional IRAs, you may calculate each IRA's RMD, combine these RMDs, and withdraw the total amount from one Traditional IRA.
If you have multiple 403(b) accounts, you may calculate each 403(b)'s RMD, combine all these RMD amounts, and withdraw the total amount from one 403(b).
If you have multiple inherited/beneficiary IRAs from the same decedent, you may choose to combine life-expectancy distributions for those inherited IRAs and withdraw the total from one inherited IRA.
You may not combine the RMD amount for different types of retirement plans. The following are examples of combinations that are not allowed:

You may not combine the RMDs for multiple qualified plans. Each RMD must be withdrawn from the respective qualified plan.
You may not combine RMD amounts for different types of plans. For instance, an RMD amount for a 403(b) account may not be withdrawn from a Traditional IRA or vice versa, and the RMD for a 403(b) account may not be withdrawn from a qualified plan.
RMD amounts for inherited/beneficiary IRAs may not be withdrawn from Traditional IRAs that you own.
Example
Sam inherited an IRA from his Aunt Suzie. The RMD amount for the inherited IRA is $6,000. Sam has his own IRA that he funded himself with regular and rollover contributions, and this year the RMD amount for his own IRA is $10,000. Sam cannot combine the two RMD amounts and withdraw from only one. Each RMD must be withdrawn from its respective account.

If you have multiple inherited/beneficiary IRAs from different decedents, you may not combine distributions for those inherited IRAs.

Should you inadvertently combine RMD amounts for different types of retirement plans, an RMD shortfall will result for the retirement plan from which you withdrew no RMD. For instance, say the RMD for your qualified plan is $10,000 and the RMD for your Traditional IRA is $5,000. If you withdraw $15,000 from the Traditional IRA and make no withdrawal from the qualified plan account, you will not have satisfied the RMD for your qualified plan account and will owe the IRS an excise tax amount of $5,000 (50% of the shortfall).


Read more: Avoiding Mistakes In Required Minimum Distributions (RMD)

[maraba]

Quote:

Originally Posted by farmerEd We have several, at different firms and need to make some decisions before the end of this year for the first time - if it makes a difference, some of these are inherited IRA's.

It doesn't make a difference.