Legal Blog

The Weekly Scenario: Inheriting an IRA

Question: My two siblings and I will be inheriting my mother’s IRA. Is there a time limit on when the accounts should be re-titled? Are there important dates I should be aware of to maintain the life expectancy payout?

Answer: In order for each child to use his or her own life expectancy payout, the IRA must be timely split.

There are two important dates to keep in mind:

September 30 of the year after your mom’s death is the date when designated beneficiaries are determined.

December 31 of the year after your mom’s death is the date by which the inherited IRA must be split.

The time between your mother’s death and the September 30th date is a time when beneficiaries can be eliminated (or paid out). While this doesn’t apply in your case, a designated beneficiary such as a charity could be cashed out during this time. At the end of this period of time, the remaining beneficiaries can stretch distributions over their own life expectancies provided the inherited IRA is divided into separate accounts by December 31.

If the accounts are timely split, it allows the designated beneficiaries to each use his or her own life expectancy for calculating MRDs from the inherited IRA.

The inherited IRA must be split into separate accounts for each beneficiary by December 31 of the year after the account owner’s death. This allows the designated beneficiaries to each use their own life expectancies for calculating MRDs from the inherited IRA. Any beneficiary who has not been designated will not affect the MRD calculations since their share of the inherited IRA is now segregated from the shares of the designated beneficiaries.

Comment: When the December 31 deadline is missed, separate accounts can still be set up. It is still prudent to do so as it will be easier to track each beneficiary’s share of the inherited IRA. However, the beneficiaries in this case must all use the life expectancy of the oldest beneficiary – the one with the shortest life expectancy – to calculate the MRDs. The beneficiaries do not get to use their own life expectancies to calculate the payout.





As always, if you have any questions or would like to learn more, please contact me at or 301-575-0313.


Steve Shane Casual SmallSteve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

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