Inherited IRAs--question about the one at TIAA

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Minot
Posts: 447
Joined: Sat Jan 29, 2011 2:35 pm

Inherited IRAs--question about the one at TIAA

Post by Minot » Thu Jan 24, 2019 6:04 pm

My brother-in-law died last month and to my delighted surprise left me shares in his two IRAs, one at Vanguard, the other at TIAA. Each of the IRAs were left to the same 14 multiple beneficiaries, 10 individuals and 4 charities. When Vanguard applied my BIL's (older than me) age to calculate my 2019 RMD, I started studying IRS Pub. 590b as well as the Wiki and several relevant Forum posts and I think I've got a pretty good handle on the RMD rules that apply. The representative who's handling my inherited IRA account (and the other 13) agrees with me that once the charities withdraw their shares, and the other 9 individuals set up their separate accounts, my RMD should be recalculated using my age to determine the Single Life Expectancy factor.

All well and good. Then I called TIAA, and their representative told me that the Single Life Expectancy used for my RMD would be based on my age. When I asked about the effect of having multiple beneficiaries including charities, she said that didn't come into it at all. While the result of this (assuming she's correct, and she was quite adamant; said they'd been doing it this way for years without any problems) is satisfactory, I'm curious about why these parts of the IRA rules don't apply at TIAA. When I asked her, her answer was too much in TIAA-speak for me to make sense of it. Can any Bogleheads explain it to me? Alan S, I suspect if anyone can it will be you.

Alan S.
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Re: Inherited IRAs--question about the one at TIAA

Post by Alan S. » Fri Jan 25, 2019 12:04 am

Minot wrote:
Thu Jan 24, 2019 6:04 pm
My brother-in-law died last month and to my delighted surprise left me shares in his two IRAs, one at Vanguard, the other at TIAA. Each of the IRAs were left to the same 14 multiple beneficiaries, 10 individuals and 4 charities. When Vanguard applied my BIL's (older than me) age to calculate my 2019 RMD, I started studying IRS Pub. 590b as well as the Wiki and several relevant Forum posts and I think I've got a pretty good handle on the RMD rules that apply. The representative who's handling my inherited IRA account (and the other 13) agrees with me that once the charities withdraw their shares, and the other 9 individuals set up their separate accounts, my RMD should be recalculated using my age to determine the Single Life Expectancy factor.

Yes, and this is the conservative interpretation of the separate account rules. But the IRS has not clarified whether those who DO set up separate accounts by the deadline (end of the year following the year of death) can use their own life expectancies even while those that do not must use the age of the oldest. This more aggressive interpretation does not require ALL beneficiaries to establish separate accounts for those that do to benefit.

All well and good. Then I called TIAA, and their representative told me that the Single Life Expectancy used for my RMD would be based on my age. When I asked about the effect of having multiple beneficiaries including charities, she said that didn't come into it at all. While the result of this (assuming she's correct, and she was quite adamant; said they'd been doing it this way for years without any problems) is satisfactory, I'm curious about why these parts of the IRA rules don't apply at TIAA. When I asked her, her answer was too much in TIAA-speak for me to make sense of it. Can any Bogleheads explain it to me? Alan S, I suspect if anyone can it will be you.

There are also two possibilities here.
1) The rep does not understand the separate account rules that apply for all inherited plans or perhaps came from the 403b side of the house where separate accounts are always established by the plan within the plan when a death cert if submitted and the individual beneficiaries do not have to establish their own separate account.
2) It is possible that the 403b treatment described above is also applied to their IRA accounts, effectively establishing a separate account for all beneficiaries when the death certificate is submitted even though the rest of the info may not have been submitted yet. The IRS does not require a separate account number for each beneficiary if the plan accounting walls off a portion for each beneficiary without that portion having a different account number. Does what she said sound similar to this?

Topic Author
Minot
Posts: 447
Joined: Sat Jan 29, 2011 2:35 pm

Re: Inherited IRAs--question about the one at TIAA

Post by Minot » Mon Feb 11, 2019 11:47 am

Alan S. wrote:
Fri Jan 25, 2019 12:04 am
Minot wrote:
Thu Jan 24, 2019 6:04 pm
My brother-in-law died last month and to my delighted surprise left me shares in his two IRAs, one at Vanguard, the other at TIAA. Each of the IRAs were left to the same 14 multiple beneficiaries, 10 individuals and 4 charities. When Vanguard applied my BIL's (older than me) age to calculate my 2019 RMD, I started studying IRS Pub. 590b as well as the Wiki and several relevant Forum posts and I think I've got a pretty good handle on the RMD rules that apply. The representative who's handling my inherited IRA account (and the other 13) agrees with me that once the charities withdraw their shares, and the other 9 individuals set up their separate accounts, my RMD should be recalculated using my age to determine the Single Life Expectancy factor.

Yes, and this is the conservative interpretation of the separate account rules. But the IRS has not clarified whether those who DO set up separate accounts by the deadline (end of the year following the year of death) can use their own life expectancies even while those that do not must use the age of the oldest. This more aggressive interpretation does not require ALL beneficiaries to establish separate accounts for those that do to benefit.

All well and good. Then I called TIAA, and their representative told me that the Single Life Expectancy used for my RMD would be based on my age. When I asked about the effect of having multiple beneficiaries including charities, she said that didn't come into it at all. While the result of this (assuming she's correct, and she was quite adamant; said they'd been doing it this way for years without any problems) is satisfactory, I'm curious about why these parts of the IRA rules don't apply at TIAA. When I asked her, her answer was too much in TIAA-speak for me to make sense of it. Can any Bogleheads explain it to me? Alan S, I suspect if anyone can it will be you.

There are also two possibilities here.
1) The rep does not understand the separate account rules that apply for all inherited plans or perhaps came from the 403b side of the house where separate accounts are always established by the plan within the plan when a death cert if submitted and the individual beneficiaries do not have to establish their own separate account.
2) It is possible that the 403b treatment described above is also applied to their IRA accounts, effectively establishing a separate account for all beneficiaries when the death certificate is submitted even though the rest of the info may not have been submitted yet. The IRS does not require a separate account number for each beneficiary if the plan accounting walls off a portion for each beneficiary without that portion having a different account number. Does what she said sound similar to this?
Alan, thank you for your very helpful reply, and my sincere apologies for not responding sooner. Regarding the TIAA practice, what I can tell you is that I found an account in my name before TIAA had even sent me their Beneficiary Acceptance packet, so it sounds like your 2) is what's going on. At any rate, I've decided not to worry about it.

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