Can RMD in year of death be taken from the adopted inherited IRA?

[loch0]

three beneficiaries are inheriting an IRA. Decedent did not take RMD in 2017. the beneficiaries each intend to create a new IRA and move their share of the original IRA to that new IRA.

Does the 2017 RMD have to be taken from the original IRA or can it be taken after the 3 beneficiaries set up their new accounts with the funds?

[dmertz]

It can be done either way, but the IRA custodian will likely prefer to create a separate inherited IRA for each beneficiary prior to making any distributions to the beneficiaries since it makes their accounting much simpler.

The decedent's year-of-death RMD can be completed by the three beneficiaries in any combination.  If one beneficiary wants to make a distribution in 2017 that is sufficient to cover the entire 2017 RMD, the other two beneficiaries need not take a distribution in 2017.  For 2018 and beyond, though, each beneficiary must satisfy their own beneficiary RMD.

[fanfare]

Contact the custodian for the proper way to proceed. Try to make sure you get in contact with someone who knows what they're talking about.

[dmertz]

Since some people confuse IRAs with qualified retirement plans like a 401(k), be sure that what is being inherited is an IRA account, not a qualified retirement plan like a 401(k).  If it's a qualified retirement plan, the 2017 RMD must be distributed prior to doing direct rollovers to inherited IRAs.  If it's actually an IRA, be sure the funds are moved by trustee-to-trustee transfer.  A distribution from an inherited IRA cannot be rolled over to an inherited IRA.

[loch0]

its definitely a traditional IRA

[dmertz]

Since the required trustee-to-trustee transfer is neither a distribution nor a rollover, there is no requirement that the year-of-death RMD be satisfied before the transfer to separate inherited IRAs.