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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My brother inherited an IRA from my father in 2010. My brother

Resolved Question:

My brother inherited an IRA from my father in 2010. My brother named me as benificiary of this inherited IRA. We all lived in North Carolina and I still do as the only surviving familiy member. My brother passed in 2012. He had taken all of his required minimum distributions in the previous years, but not for 2012. He passed in December before he took the one for 2012. He was in his late 30's and I in my early 40's.

What I want to know is how I need to take the distributions on this account. I have heard that if you are the benificiary of a benificary IRA that you can take the distributions based on the decedents life span since it would technically not be skipping a genereation and would be no different that if he had been alive taking the RMDs. I have also heard that since he didn't take his distribution in 2012 I will have to close it in 5 years because of the penalty of not taking the RMD. Can the estate take the distribution into it even though it is late and fix this? What I am trying to do is keep the money in the account as long as possible.
Submitted: 3 years ago.
Category: Finance
Expert:  Megan C replied 3 years ago.

MyVirtualCPA :

Thank you for your question, and thanks for using Are you the new beneficiary of the inherited IRA?

MyVirtualCPA :

If you inherited the inherited IRA then you could make the decision as to whether to take the RMD or close the account out in 5 years, based on when you inherited the account

MyVirtualCPA :

so, your brother missing his RMD for 2012 would not mess things up for you

MyVirtualCPA :

However, if the inherited IRA is remaining in his estate, then there's no way to fix not taking the RMD during 2012.

MyVirtualCPA :

The estate cannot take the RMD now, as it is too late

Customer: replied 3 years ago.
Yes, that is correct. I generally wouldn't have given it much thought but it is about $80K and taking the distributions over 5 years or less is likely to push me into a higher tax bracket. Plus the money would be best held onto until my son is of age to enter college in 9 more years.
Expert:  Megan C replied 3 years ago.
If you have newly inherited the account, then you will start taking RMDs this year and can elect to take over the lifetime of the decedent or within 5 years whichever you prefer.

So, even though the estate didn't take the RMD when he passed, you should be okay. At worst, you have one year of penalty absorbed by the estate but for your purposes it doesn't make it so that you have to take the account in five years.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.
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