Using Inherited IRA Distribution to Fund RMDs for Other IRAs

[jdetray]

Hello,

My wife inherited an IRA from her father. She then designated me as the beneficiary of IRA. Then she passed away, and I inherited the IRA. The statements for the inherited IRA list:

Her father (deceased)

My wife (deceased beneficiary)

Me (beneficiary)

I have multiple IRAs, but only this one inherited IRA.

I have reached the age (73) when I am required to take RMDs from my IRAs. I learned that a taxpayer with multiple IRAs is allowed to calculate the total RMD amounts and, if desired, take a large distribution from one IRA to fund the total RMD obligation for the year. In other words, the IRS does not care if you take a small distribution from each of your IRAs or one large distribution from a single IRA, as long as they receive the total RMD amount that you owe.

I had decided to take a large distribution from the inherited IRA to fund all of this year's RMDs. I have since learned that a distrbution from an inherited IRA may NOT be used to cover RMDs for other IRAs.

One tax professional told me this IS allowed, but all others have told me that it is NOT allowed. I am now convinced that I can not use a distribution from the inherited IRA to fund the RMDs for my other IRAs.

I have spent hours looking through the IRS website, but I have not found any clear statement explaining why this is not allowed.

Can anyone enlighten me where I might find a definitive IRS explanation for why an inherited IRA can not be used in this way?

Thanks,

Jeff

[Mr W]

There are different rules for IRA owners and IRA beneficiaries.   IRS Publication 590-B provides  detailed treatment  of these rules.   There may be a solution though...keep reading.  The question you asked was not squarely addressed in Pub. 590-B but I believe the best answer is that you need to separate IRAs where you are the original owner and IRAs where you are a beneficiary.  That's because these types of IRAs are treated differently for RMD and other purposes.   As you said, if you are the original owner of an IRA, you can pull all of your RMD from one of your traditional IRAs.  That is clearly stated in the rules.  And if you are the beneficiary of more than one IRA that you inherited from the same decedent, you can do the same type of thing, i.e., pull the RMD for each from just one of those inherited IRAs.   Pub. 590-B says so.   But you cannot mix and match between these types of IRAs or those inherited from different decedents. That is, you cannot satisfy your personal RMD by withdrawing from an inherited IRA.  That's because the RMD requirement relates back to the original owner who is now deceased even though the amount is determined by reference to your age.  Moreover, under the new 10-year rule, you may have to drain the entire inherited IRA within a 10-year period, which I think began when your wife's father died (assuming he died after 2019).  Also, your original IRA cannot be combined (or merged) with an inherited IRA.  Furthermore, you cannot rollover an RMD.  BUT...it may be possible to return part of the funds you withdrew from the inherited IRA to the inherited IRA.  That is, maybe you can roll over the amount in excess of the RMD amount.  Ask the custodian if you can do that.  I think there would be a 60-day window.  So act quickly.  Just say it was a mistake and don't over explain it.

[Mr W]

I see now we are outside the 60 day window.   (Feb 2 2025)