dmertz
Level 15

Deductions & credits

"The Fidelity IRA was a very recent rollover from my brother's company plan.  As such, he had not yet provided any beneficiaries."

 

I'm going to guess that the company plan was a SEP plan or a SIMPLE-IRA plan (both are IRA-based plans) that was moved to the IRA-BDA by trustee-to-trustee (Fidelity-to-Fidelity) transfer, not by rollover.  If the company plan was instead a 401(k), 403(b), 457(b) or the federal TSP, the funds would have to have been moved by distribution and rollover and only an individual beneficiary can do that, and the estate would not be involved.  Fidelity's specialist would know this and not permit the funds to be moved to an IRA-BDA if the company plan was not an IRA-based plan.

 

With the estate being the beneficiary and your brother dying before reaching his required beginning date for RMDs, the IRA-BDA is subject to the 5-year rule for distributions.  This means that no annual RMDs are required and the account must simply be fully drained by the end of 2029.  The estate can assign respective shares of the IRA-BDA out to IRA-BDAs for the beneficiaries of the estate, moved only by trustee-to-trustee transfer, but this does not change the distribution requirement under the 5-year rule.  Each of the separate IRA-BDAs will still be subject to the 5-year rule.  Depending on the amount involved, the beneficiaries might want to spread distributions out over several years rather receiving all of the taxable income in 2029.