Greetings: An inherited IRA was transferred into an account under my name today, Feb 8, 2024. I want to transfer it from the bank it is at now to another bank. I called the prospect new bank to tell them of my plans. Further, I told the new bank that once I got the money transferred to them, then I would take my RMD sometime later in 2024. However, the new bank said I need to take my 2024 RMD from the old bank account prior to transferring to the new bank, otherwise, they said, the IRS would penalize me for excessive distributions. Huh? I don't think the IRS cares which bank I take the RMD from as long as I take it sometime in 2024, correct ?
I'm going to call the new bank again and ask to speak to a supervisor, but I wanted to check with the "community" first. Thank you !
The new bank would be correct that the RMD must be taken first if the old account was in a 401(k), 403(b), 457(b) or the federal TSP before doing a direct rollover to an inherited IRA, but for an inherited IRA which must be transferred by nonreportable trustee-to-trustee transfer there is no requirement that the RMD be taken first because a trustee-to-trustee transfer of an IRA is neither a distribution nor a rollover.
Bank personnel are notoriously poorly trained with regard to the handling of inherited IRAs.
You want to do a direct trustee-to-trustee transfer , and you don't need to take an RMD before doing that.
the best place for your Inherited IRA is a self-directed Inherited IRA account at a broker like Schwab or Fidelity.
right, trustee to trustee, and Thanks regarding the RMD question.
Brokerage account for Inherited IRA: In this particular case, I want the money to go into Certificates of Deposit (CDs) and I don't like "brokered CDs" offered by Vanguard, Schwab, etc., because if I have to cash one in early, there could be a substantial loss versus a bank CD where I would just have to forfeit one quarter's interest payment.
The thing is, short term interest rates will be going back down soon, and the stock market is soaring.
The new bank would be correct that the RMD must be taken first if the old account was in a 401(k), 403(b), 457(b) or the federal TSP before doing a direct rollover to an inherited IRA, but for an inherited IRA which must be transferred by nonreportable trustee-to-trustee transfer there is no requirement that the RMD be taken first because a trustee-to-trustee transfer of an IRA is neither a distribution nor a rollover.
Bank personnel are notoriously poorly trained with regard to the handling of inherited IRAs.