RMD from Inherited IRA

[Bram]

DH inherited an IRA from his sister who passed a year ago. She had inherited it from her deceased husband in the 1990s & was taking RMDs. DH transferred his part of the account from her Fidelity to our Vanguard. He needs to start taking RMDs from it this year. We spoke to Vanguard about this & have been informed that since DH didn't inherit it from the original owner (his BIL), Vg won't be calculating the RMD.

I have a call into Vg to get more info, but I'm wondering if anyone has encountered this, or can shed any light on why Vg won't be calculating & sending the RMD for this "Inherited Inherited IRA". DH will be 70 in July, but age isn't a factor in when RMDs begin in this situation.

 

[GrayHare]

Brokerages are skittish about definitively telling you an RMD amount because they could incur liability if they specify the wrong amount.

 

[hesperus]

That's odd. It shouldn't matter where it came from, since it's now sitting in a Vanguard account. It's a basic service.
I transferred an inherited IRA from Wells Fargo to Fidelity, and neither of them was ever adverse to calculating the RMD. In fact, Fidelity did it automatically in my account on the first of every year.

 

[bingybear]

That's odd. It shouldn't matter where it came from, since it's now sitting in a Vanguard account. It's a basic service.
I transferred an inherited IRA from Wells Fargo to Fidelity, and neither of them was ever adverse to calculating the RMD. In fact, Fidelity did it automatically in my account on the first of every year.

Was your IRA inherited multiple times before you got it? I don't believe that RMDs are reset on a new life every time they are inherited.

 

[LOL!]

This is not odd. I see discussions of this from time to time at bogleheads.org. One should probably start by reading IRS Publication 590-B about this situation.

 

[RobbieB]

Yeah, figure it out yourself, it's not hard.

 

[kaneohe]

Was your IRA inherited multiple times before you got it? I don't believe that RMDs are reset on a new life every time they are inherited.

That possibility may be why the custodian is skittish.

 

[jwkde]

That is strange, DW inherited her an IRA from her Mom, who had inherited from her husband. Vanguard calculates the RMD amount and sends it to DW every January plus it is available online in the account.

I'd call back and ask again, maybe another VG rep will give you a different answer

 

[MichaelB]

DH inherited an IRA from his sister who passed a year ago. She had inherited it from her deceased husband in the 1990s & was taking RMDs. DH transferred his part of the account from her Fidelity to our Vanguard. He needs to start taking RMDs from it this year. We spoke to Vanguard about this & have been informed that since DH didn't inherit it from the original owner (his BIL), Vg won't be calculating the RMD.

I have a call into Vg to get more info, but I'm wondering if anyone has encountered this, or can shed any light on why Vg won't be calculating & sending the RMD for this "Inherited Inherited IRA". DH will be 70 in July, but age isn't a factor in when RMDs begin in this situation.

My mother has a non-spousal inherited IRA at Vanguard and they do the RMD automatically, just like they do for her IRA. I'd call again and ask.

 

[kaneohe]

That is strange, DW inherited her an IRA from her Mom, who had inherited from her husband. Vanguard calculates the RMD amount and sends it to DW every January plus it is available online in the account.

I'd call back and ask again, maybe another VG rep will give you a different answer

Perhaps Mom "assumed" the IRA from her DH (made it her own) instead of holding it as inherited. Then it is a first "inherited" IRA when DW inherits so VG knows how to do RMD...............or if VG held the IRA when Mom's DH passed, then it knows the complete history so can do the calculation. In OP's case, IRA was transferred to VG from Fidelity so VG may not know the complete history.

Note that RMDs for inherited IRA are calculated differently than a "normal" RMD. "normal" RMD just depends on owner's age each yr. "First generation" inherited IRA RMD for the 1st yr can depend on inheritor's age the first yr. You then reduce the divisor factor by 1 each yr. "2nd generation" inherited RMDs use the same factor as the "1st gen" so you need to know what the age of the 1st inheritor was when the 1st RMD was taken. If you don't have the history of the 1st gen inherited IRA, then you don't know what to use.

 

[SecondCor521]

"2nd generation" inherited RMDs use the same factor as the "1st gen" so you need to know what the age of the 1st inheritor was when the 1st RMD was taken. If you don't have the history of the 1st gen inherited IRA, then you don't know what to use.

It seems like if you know at least the most recent RMD and the previous year end value, you could reverse engineer it:

RMD this year = year end value / ((previous year end value / RMD last year) - 1)

But I can see Vanguard not wanting to wade into something like that, especially in the case of a transferred IRA.

 

[kaneohe]

It seems like if you know at least the most recent RMD and the previous year end value, you could reverse engineer it:

RMD this year = year end value / ((previous year end value / RMD last year) - 1)

But I can see Vanguard not wanting to wade into something like that, especially in the case of a transferred IRA.

very clever! to clarify you might want to add "prior" in front of each "yr end value"?