Inherited IRA - what happens to the account when one empties it

[tominboise]

My wife has an inherited IRA from her father, through Fido. The 10 year rule does not apply to her IRA but it's not a very big balance and I thought I would empty all out this year in lieu of another RMD. (We have been taking RMD's since 2015). What happens to the IRA account when it gets emptied? Will Fido shut it down after the end of the year and the final statement with a zero balance?

 

[MissMolly]

If you are old enough that RMDs are required, you cannot take a distribution from an inherited IRA and have it count for your personal IRA.

 

[tominboise]

If you are old enough that RMDs are required, you cannot take a distribution from an inherited IRA and have it count for your personal IRA.

I probably misstated it. I want to take the entire balance out of the IRA in lieu of taking another RMD from this inherited IRA.

 

[SecondCor521]

My wife has an inherited IRA from her father, through Fido. The 10 year rule does not apply to her IRA but it's not a very big balance and I thought I would empty all out this year in lieu of another RMD. (We have been taking RMD's since 2015). What happens to the IRA account when it gets emptied? Will Fido shut it down after the end of the year and the final statement with a zero balance?

Probably. They might wait a month or two in case there are any lingering dividends or other income.

If you then have them distribute *that* and get the account to $0, then they should be able to close it. Then there will (obviously) be no RMD for her in 2026.

 

[Texas Proud]

I am not sure they close them... I have had some open at Vanguard for awhile... zero balance...

Now, one of them that I transferred does not allow me to go into the history for some reason, but the account is still there...

At Fidelity I still have an executor account with a zero balance 4 years later... it does not show up on my screen but I clicked and it shows as a hidden account...

IMO they will keep them 'open' for 7 years and maybe as long as 10...

 

[OldShooter]

Schwab closed my inherited IRA (from my mother) two or three months after I had emptied it. I could have called my rep to have it closed more quickly, but there really wasn't any urgency and I correctly assumed that they'd take care of it in due time.

 

[SecondCor521]

I am not sure they close them... I have had some open at Vanguard for awhile... zero balance...

Now, one of them that I transferred does not allow me to go into the history for some reason, but the account is still there...

At Fidelity I still have an executor account with a zero balance 4 years later... it does not show up on my screen but I clicked and it shows as a hidden account...

IMO they will keep them 'open' for 7 years and maybe as long as 10...

If you can deposit money, keeping an account open makes sense (for the financial institution anyway).

An inherited IRA cannot be added to after the initial deposit, so once it gets to zero the institution knows it's an extinct account. No reason to keep it open.

 

[Sunset]

Be sure to download all the statements because if they close it, how would you get statements in 2 years time ?
I had a bank, where they opened extra accounts automatically, I asked them to close them but they refused as they said they have to keep them open for 10 years for records. Totally weird as I didn't request them and never used them.
They claimed they could hide them from my view.

 

[bbqcoder]

I am not sure they close them... I have had some open at Vanguard for awhile... zero balance...

Now, one of them that I transferred does not allow me to go into the history for some reason, but the account is still there...

At Fidelity I still have an executor account with a zero balance 4 years later... it does not show up on my screen but I clicked and it shows as a hidden account...

IMO they will keep them 'open' for 7 years and maybe as long as 10...

I have a similar account with ETrade. It was a custodial account for one of my daughters. I transferred it to her once she became of age. It's still there in my portfolio with a $0 balance after 5+ years.

I wonder if they do this so you can access statements?

 

[pb4uski]

I probably misstated it. I want to take the entire balance out of the IRA in lieu of taking another RMD from this inherited IRA.

That is what I did with a traditional IRA that I inherited from DM. I was afraid that I would forget to do an RMD at some point and the amount was not that significant so I just took it all in 2024 and, incrementally, it reduced my Roth conversion headroom in the 12% bracket for 2024.

The account is still there with a $0 balance but I've hidden it from my dashboard and reports. The last available statement for the account was for the month when I drained the account... no statements since then.

 

[pb4uski]

Probably. They might wait a month or two in case there are any lingering dividends or other income. ...

I had that happen. Thought that I had drained it but then had $1.54 of income and had to drain it again.

 

[38Chevy454]

I have a couple closed accounts at Fidelity (not inherited IRAs, but old work 401ks) that are still present on my portfolio account listings. I guess Fidelity just keeps them on there for a long time for history purposes? They all show $0 balance and nothing invested.

 

[SecondCor521]

I have a couple closed accounts at Fidelity (not inherited IRAs, but old work 401ks) that are still present on my portfolio account listings. I guess Fidelity just keeps them on there for a long time for history purposes? They all show $0 balance and nothing invested.

Yeah, Fidelity still knows about a 401(k) plan I had five employers ago and rolled over to my IRA 17 years ago. I don't know why, but it doesn't really matter so I don't worry about it. (I have a Fidelity CC and HSA and I think the 401(k) shows up when I log in.)

 

[SJhawkins]

From my understanding you can use the chat feature and or call and ask them to remove a old account.

We are taking Fidelity for a try with one account, when the account was created a old 401k showed up that was transferred about 25 years ago, so will be trying the above at some point.