Taking RMD prior to transferring inherited IRA to a new bank?

Forum|Forum|2 years ago
February 9, 2024
2 replies
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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 !

Not A Product Question

Best answer by dmertz

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.

fanfare

Employee

You want to do a direct trustee-to-trustee transfer , and you don't need to take an RMD before doing that.

@genelawson566

fanfare

Employee

the best place for your Inherited IRA is a self-directed Inherited IRA account at a broker like Schwab or Fidelity.

@genelawson566

genelawson566Author

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.