Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 04-12-2015, 02:39 PM
Junior Member
 
Join Date: Apr 2015
Posts: 2
Contribute While Getting RMD from Inherited IRA?

My brother and I have inherited several (traditional) IRA's from my mom who passed away last summer at age 88. She in turn had inherited them from my dad who passed 20 years ago at 73 (spousal inheritance). She'd been getting RMDs from them.

I understand the RMDs will now come to us and indeed two institutions sent us what would have been Mom's 2014 RMD (split 50/50). The combined amounts corresponded to the balances at year end 2013 with 12.7 divisor. (The institutions do the calculating.)

(The accounts have been split 50/50 for the new inherited IRA accounts.)

For tax planning purposes, what should we be expecting for 2015? I am 56, so looking at the Single Life Table I see 28.7 next to 56. Should I expect 1/28.7 of the 12/31/2014 balances in each inherited IRA account?

More importantly, does collecting an RMD from inherited accounts have any bearing on my own ability to contribute to my own traditional IRA for TY2014 and going forward (subject to normal limits--there are not huge sums involved)? I was planning to contribute & deduct $6500 but thought I better check first.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 04-12-2015, 06:31 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,071
For tax planning purposes, what should we be expecting for 2015?====>> Generally, non-spousal IRA heirs must withdraw a minimum amount each year, starting by Dec. 31 of the year after your mother passed away. A non-spouse beneficiary must begin taking RMDs by Dec. 31 in the year following the IRA owner's death. Failure to do so will result in the IRA being subject to the five-year rule ; the beneficiary must take a full distribution of the IRA within 5 years of the original owner's death. This type of distribution usually has the worst tax consequences for the beneficiary and is often the result of a mistake by the beneficiaryNote: This is true whether it’s a traditional IRA or a Roth. To calculate this distribution, you need to take the balance on Dec. 31 of the previous year and divide it by the heirs’ life expectancy.Unless your account is a R-ira, there is income tax on this required payout.if you choose to,you can draw out these mrd over your own expected life spans; stretching out the IRA gives the funds extra years and potentially decades of income-tax deferred growth in a traditional IRA or tax-free growth in a Roth IRA.
I am 56, so looking at the Single Life Table I see 28.7 next to 56. Should I expect 1/28.7 of the 12/31/2014 balances in each inherited IRA account? =========>For this question, you need some professional help from the retirement plan admin. At some point, all inherited IRAs must be distributed to beneficiaries according to IRS RMD rules. For non-spouses inheriting an IRA directly from the deceased owner, the RMD options depend on whether the deceased IRA owner died before or after the date to start taking RMDs. If the owner died after, non-spouse beneficiaries have the option of using the owner's life expectancy under the IRS tables or their own life expectancy. If the owner died before taking RMD or a Roth IRA is involved, a non-spouse beneficiary can only take the RMD under the IRS life expectancy tables using his own life expectancy.

More importantly, does collecting an RMD from inherited accounts have any bearing on my own ability to contribute to my own traditional IRA for TY2014 and going forward (subject to normal limits--there are not huge sums involved)? ==========>>>>>> yes you still can contribute to your own IRS, NOT inherited IRA.Inheriting an IRA from anyone other than your deceased spouse means you cannot treat the IRA as your own. SO, No contributions can be made to the account; for this reason, it makes sense for you, a s a non-spouse heir , to open a new IRA with the inherited fundsif you want.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 04-12-2015, 08:43 PM
Junior Member
 
Join Date: Apr 2015
Posts: 2
Thank you for your reply.

Yes, mom was 88 so had been getting RMD's for years. (Dad, the original owner, would have been getting them for a few years as well when he passed on in 1994.)

I guess that means I have the option to continue down the Uniform Lifetime Table that was being used for mom where the divisor for 88 (2014) was 12.7 and so the divisor for 89 (2015) would be 12.0

OR

Use the divisor on the Single Life Table for my age in 2015 which is 56 and that 28.7.

I would opt for this (no hurry on the payout) and I better check with each institution to make sure they are all on the same page.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Inherited IRA FBN2014 Retirement Planning 1 11-21-2014 02:17 PM
Inherited House gr8smoke Capital Gains 1 04-19-2014 10:44 AM
Inherited IRA distribution jctrumble1 For 2013 1 02-19-2014 03:04 AM
Can I claim unpaid money that daughter did not contribute while living with us? Jane Doe Miscellaneous 1 10-13-2012 06:06 AM
Am I eligible to contribute (and how much) to a Roth IRA? jage21 IRA/Sep 1 02-21-2009 09:14 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning