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Ask the Expert: What you should know about inherited IRAs

My wife is taking required minimum distributions (RMDs) from her retirement account. She is named as one of two 50 percent beneficiaries on her recently deceased aunt's IRA. Can she transfer her inherited portion to her current IRA and combine them for ease of calculating future RMDs? Or must she maintain a separate inherited IRA account?

Your wife must maintain a separate inherited IRA, remain identified on the account as its beneficiary, and calculate RMDs from the account on a different actuarial table from the one she uses for RMDs from her own IRA. Only a deceased IRA owner's surviving spouse has the option of becoming the account's new owner.

If your wife is Linda Schwartz, and her aunt was Susan Jones, the inherited account should be titled "Susan Jones (deceased) IRA for the benefit of Linda Schwartz."

After receiving a copy of the aunt's death certificate, the IRA custodian can divide the account into inherited IRAs for the beneficiaries. Your wife's inherited IRA can then be moved to another custodian in a trustee-to-trustee transfer.

She must take her first RMD by Dec. 31 of the year following her aunt's death; the RMD is based on her own life expectancy as it appears on Table 1, "Single Life Expectancy for use of Beneficiaries," in IRS Publication 590. (The table she uses to determine her RMDs from her own IRA is Table 3, "The Uniform Lifetime Table," also found in IRS Publication 590.)

Most custodians allow the beneficiary of an inherited IRA to name a successor beneficiary. (But a successor beneficiary can't take RMDs based on his or her own life expectancy. Successors inherit the original beneficiary's timetable along with the IRA.)

The bottom line

An IRA beneficiary who wasn't married to the IRA's deceased owner must maintain the account as an inherited IRA.

More information

IRS RMD for IRA beneficiaries

Rules for inherited IRAs

TO ASK THE EXPERT Send questions to Ask the Expert/Act 2, Newsday, 235 Pinelawn Rd., Melville, NY 11747, or email act2@newsday.com. Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.

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