Inheriting money in an IRA

[cathy63]

Oh WOW. Yes FIL (his IRA) died over 10 years ago. That IRA is now in MIL's name. I'm not sure exactly how it is titled. MIL passed in August. I think that the Annuities are treated the same since both were created well before the Secure Act. However the Annuity and the IRA are different things albeit tied together in a strange way. There seems to be separate distribution rules for annuities within IRAs that pre-existed before Secure.

https://www.investmentnews.com/secure-act-creates-wrinkle-annuities-inherited-iras-192873




So how do I determine if this is Is this really complicated or am I just overthinking it? I guess this may be just 1 more reason for not including annuities within IRAs. I will probably just have DW close out the annuities within the IRAs and move the Inherited IRAs to our primary custodian.

Step 1 is to read each of the annuity contracts and find out what is supposed to happen when the owner dies. Once you know that, you can figure out whether things are really complicated or not.

Aside from that, here's a good article on successor beneficiaries: https://www.kitces.com/blog/success...le-secure-act-eligible-designated-beneficary/

With respect to your FIL's account, your wife's case is "Scenario #2" in this article.

Subject to the same ‘exception’ for surviving spouses as discussed above, any Successor Beneficiary inheriting an IRA, 401(k), or other retirement account from an individual who died before the SECURE Act’s effective date will find themselves subject to the SECURE Act’s 10-Year Rule.

For your MIL's own accounts, your wife is a "Non-eligible Designated Beneficiary" who is subject to the SECURE Act's 10-Year Rule.

 

[all4j]

I would strongly encourage you to talk this over with Fido before talking to the local agent. There are several possible wrinkles here that make some of the advice possibly iffy. & terminology can be very confusing. For example, is the meeting with a broker (such as Edward Jones) or with the annuity provider (such as Metlife)? Whoever it is, there is a good chance that they'll skew their presentation for their purposes, maybe withhold info or at least not offer proactively. Since you want to end up at fido, they'll be more apt to tell you how to get there. When you call have the exact info in front of you. No current experience by me, but fido used to have expertise of annuities from other providers. They'll at least be able to help you know what to ask, demand, etc from upcoming meeting.

There may be some subtle differences -- in regard to both annuity originally for FIL & one for MIL. Were/are there multiple beneficiaries? Did MIL take FIL's as her own, or is it shown as his for her benefit? Would he have had to have started RMDs (gets to whether there might be an eligible bene)? Have the annuities started annuitizing?

Those are really rhetorical for purposes of the thread, but might determine if the posts are on target. I'm not trying to be comprehensive though & I'm sure there are others. My guess is that it is likely you can 1035 exchange these to Fido, rid yourself of the annuity aspect, & just determine the best distribution plan for this case.

Good luck!