Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  My client has inherited an IRA account and a 401K account from his mother.  Can these be aggregated?  Can the minimum distributions be taken from just one account?

Answer:  Yes.  The rules permit the inherited 401K account to be transferred to an inherited IRA account.

Multiple inherited IRAs can be aggregated so long as they are inherited from the same decedent.  If Tim has one inherited IRA from his mother and another from his brother, those accounts cannot be aggregated.  Tim cannot aggregate the inherited account with his personal IRA, either.  On the other hand, if he inherited two qualified accounts from his mother, those accounts can be combined—through the trustee-to-trustee transfer process—into one.

A distribution that Tim takes from an inherited IRA from his mother can count toward the aggregate RMD requirement for all accounts he inherited from his father.  However, distributions from the father’s account do not count toward RMD requirements for Tim’s own IRA, nor do they count toward RMD requirements for the account for his brother.

Inherited IRA accounts may not be aggregated with inherited Roth IRAs, nor do distributions from one satisfy RMD requirements for the other.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.