Multiple inherited IRA?

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Topic Author
Tom_T
Posts: 4824
Joined: Wed Aug 29, 2007 2:33 pm

Multiple inherited IRA?

Post by Tom_T »

Question for the inherited IRA experts among us...

My wife has an inherited IRA at Vanguard via a distribution from a 401K at Bank X. No problems there, it's been in place for a year.

Now, Bank X is going to make a final distribution of some other retirement account owned by her sibling at Bank X. We (she) has asked to have a lump-sum check sent, made out to Vanguard as a trustee, so that it can be rolled over.

Does my wife now have to open a second inherited IRA at Vanguard? I know that you can't contribute to one, but this is kind of an unusual situation where Bank X has issued two distributions a year apart from accounts owned by the same sibling. Her current account is titled as "(wife's name), IRA VFTC AS CUSTODIAN, BENEF (sibling's name)", so I would think it's OK to roll the amount into this existing account.

I will certainly check with Vanguard, but I was wondering if anyone here had a similar circumstance.
Alan S.
Posts: 12629
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Multiple inherited IRA?

Post by Alan S. »

Tom_T wrote: Mon May 17, 2021 4:22 pm Question for the inherited IRA experts among us...

My wife has an inherited IRA at Vanguard via a distribution from a 401K at Bank X. No problems there, it's been in place for a year.

Now, Bank X is going to make a final distribution of some other retirement account owned by her sibling at Bank X. We (she) has asked to have a lump-sum check sent, made out to Vanguard as a trustee, so that it can be rolled over.

Does my wife now have to open a second inherited IRA at Vanguard? I know that you can't contribute to one, but this is kind of an unusual situation where Bank X has issued two distributions a year apart from accounts owned by the same sibling. Her current account is titled as "(wife's name), IRA VFTC AS CUSTODIAN, BENEF (sibling's name)", so I would think it's OK to roll the amount into this existing account.

I will certainly check with Vanguard, but I was wondering if anyone here had a similar circumstance.
This is a little hard to follow, so I need to be sure of the entire situation. It sounds like your wife inherited a 401k and perhaps a DB pension plan as well from her sibling. If she was not the sole beneficiary of these plans, please advise. The 401k was directly rolled into an inherited IRA at VG a year ago, and now due to some delay, the other plan needs to be handled in the same way.

If that is correct, the RMD divisor is the same for each account and the second account can be rolled into the existing inherited IRA. Note that any RMDs due for 2021 or prior years that have not been distributed from the other plan will have to be distributed before the direct rollover is done.

There are some other possible issues if sibling passed prior to 2020, so please advise DOD of sibling and advise of any changes to my interpretation of the accounts made above.
Topic Author
Tom_T
Posts: 4824
Joined: Wed Aug 29, 2007 2:33 pm

Re: Multiple inherited IRA?

Post by Tom_T »

Alan S. wrote: Mon May 17, 2021 7:15 pm
This is a little hard to follow, so I need to be sure of the entire situation. It sounds like your wife inherited a 401k and perhaps a DB pension plan as well from her sibling. If she was not the sole beneficiary of these plans, please advise. The 401k was directly rolled into an inherited IRA at VG a year ago, and now due to some delay, the other plan needs to be handled in the same way.

If that is correct, the RMD divisor is the same for each account and the second account can be rolled into the existing inherited IRA. Note that any RMDs due for 2021 or prior years that have not been distributed from the other plan will have to be distributed before the direct rollover is done.

There are some other possible issues if sibling passed prior to 2020, so please advise DOD of sibling and advise of any changes to my interpretation of the accounts made above.
Wife was not the sole beneficiary. There are other siblings, all getting an equal share. Wife is the youngest of the group. So far, each person has their share of the 401K plan. Each person will also be getting a share of this final distribution.

Sibling passed in 2019. Sibling was four years older than my wife.

Wife did not take a RMD in 2020 because RMDs were waived for one year by the CARES act. She will be taking one this year. My understanding is that there is a special set of divisors for non-spousal inherited IRAs. The table I referenced shows a factor of 27.0 at age 58, 26.1 at 59, and so on.
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