Unlocked Content For Our "Registered" Guests

          Information Current as of:  March 2nd, 2020


Breaking News: Congress Killed the Stretch Inherited IRA account as we know it for non spouse beneficiaries.  This became effective January 1st, 2020 for deaths of IRA/Retirement Fund owners.

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M.D. AndersonHi! I want to personally welcome you back to this extremely important and emerging field of personal finance that has for the most part, been ignored by banks, brokerage firms and insurance companies to date. Most of these financial institutions do a good job of helping you accumulate wealth inside a tax deferred wrapper such as an IRA - but very few seem to care much about what happens when you die.

Inherited IRA consultants all around the country remain frustrated that many financial advisers push you into investment and insurance products that trap your heirs at death with poor beneficiary elections and in some cases, poor choices for surviving beneficiaries.

Make no mistake, the newly passed SECURE ACT drastically changed the rules for inheriting someone's IRA.  The quick way to say it is YOU HAVE 10 YEARS to pay the taxes on the money you just inherited, unless you are a spouse of the decedent.

Now, if you are doing your estate planning and still amongst the living, the quick way to inform you of these BIG changes is to say you have a few more years to be forced to take your RMD's (1.5 years more now age 72).  And you will need to review your entire estate plan and legal documents now to be sure they don't specify law regarding your retirement funds that no longer exists!


Family is special. If you are an heir, the best way you can honor your loved one who left their IRA to you is to be diligent now on how you treat the money. Treat it like they did while they were still alive. I am dedicated to helping you do that with vast knowledge and experience.  My multi-licensing and business associations with other top Inherited IRA advisers guarantees you will now be reading some of the best content on inherited IRA's in this "registered guest" section. (And I remind you at no cost or obligation)

Just remember that this information has to remain general in nature as each specific case my firm takes under a "client" retainer relationship has twists and turns that can not be known until all the facts are discovered.  Once the facts are known, one can just simply follow procedures with paperwork submission and follow up to transact a successful inherited IRA transfer. If your inherited account now pending doesn't pay a living trust, your estate management tasks will undoubtedly be more simple than if it is.

A caution is in order if you are a "do it yourselfer" --  Run your final decisions by me or another qualified Inherited IRA consultant before taking action. The cost factors to do that are small. That way, any mistake you might make can be corrected BEFORE damages can result.

Those receiving an Inherited IRA account who want professional guidance from the onset can employ my firm's services at any level. We can simply review your own steps.  Or, we can perform all steps* for you or anything in between. 

That way, you can continue to enjoy life and you won't have to make hard decisions all alone on what may be hundreds of thousands of inherited retirement dollars now in your control as estate manager.

* Noting actual document signing and final decisions would still rest with you.

Regardless, I strongly suggest you include my legal consulting partner Dr. Gefter as profiled on our introductory page in all work performed for you, especially if any legal issues exist.  Even if you are a CPA or attorney as an heir or just representing your client for Inherited IRA funds, you should seriously seek our joint counsel before you make hard decisions for yourself or your client just to be careful. (YES, IT'S THAT COMPLICATED.)

Here's A Story to Show How Easy It Is to Make a Mistake:

A prior retained client case back in October 2012 had a 9 point IRA "Procedures" list drafted by the family east coast estate lawyer for the IRA beneficiaries. This was a very distinguished lawyer who reminded me in a short conversation that he had a "high" hourly billing rate.  Yet, I found two of his nine points were 100% wrong! 

Since hundreds of thousands of IRA dollars were involved, I was shocked to see the notations he made stating the heirs can feel free to convert their shares into Roth IRA's, owing the tax but preserving the tax free benefits.  Sadly, he was out of his league on this subject since the IRS does not allow ANY inherited account to be converted to Roth.

But it got worse. He also told the heirs in his 9 point list that they could do an IRA rollover as long as they pay the money back in 60 days!  Again, you can't temporarily borrow from an inherited account. If any of the heirs followed his advice -- full taxation in the year withdrawn would be mandatory!

Though my client (one of many named beneficiaries) was warned in time to scuttle the list and not follow 2 of the listed 9 points -- my guess is other heirs may have trusted the faulty advice, since many had signed paperwork prior to my client hiring me.

Here's What We Do For Clients:

To serve your interests, my firm follows a proprietary grid of options and procedures that goes into great detail to be sure nothing turns out badly with the death benefit payment and the registration of your new Inherited IRA account.

Upon request, a written procedural "steps guide" with a check off system is provided so you can track our work together as each step is performed.  And each task can be assigned.

Or, you can try to do it yourself and if that is the case, I am sure the information you find on this "registered guest" only website will help you in general terms.  You can always bring us in if it becomes too difficult. Just try to remember to do so BEFORE signing any forms you don't totally understand.

Am I telling you that this is an "impossible mission" if you try to do it all on your own?  No that's not what I am saying, but your odds of doing it 100% right are low without qualified help supporting or watching your steps. My 22 years of Inherited IRA consulting = the experience to warn you in advance.  (Hiring us to at least watch your back is highly recommended)

Lastly, if you desire professional representation immediately, or at any point, or have a specific question -- please give me a call on my direct toll free number below.  No obligation or cost for 5 minute or less phone chats.



M.D. Anderson Signature Guarantee
M.D. Anderson, President & Founder
Financial Strategies, Inc.

P.S.  Don't forget about this website when your tasks are done. Be sure to point others that inherit retirement money to this information website. You will be doing them a great favor!

Inherited IRA Registered Guest

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Small Eggs3 Important Notes Before You Begin  It kind of comes down to who you listen to now. Your parent's former adviser, or the advisers that work on inherited IRA cases every day.


Risks AheadThese Are The 5 Biggest Mistakes On Inherited Accounts Don't avoid the caution signs on these, or it could really trip you up during the funding and administration of  your Inherited IRA.


Hippie Baby BoomersBaby Boomers May Be At Risk!  Free and loose was an early "culture" of America's baby boomers. So, extra attention may be required since most baby boomers are overly trusting like their parents were.


Follow the RulesHere are 10 Rules To Follow To Stay Out of Trouble Ignore any one of these 10 rules and the flames of Inherited IRA Hell may not be far behind you!             



100 Year Old ManThese 5 Concepts Can Help Your Inherited IRA Stay Alive for a Long, Long Time  But ignoring these concepts could  suddenly stop the tax advantages of an inherited account at any time. 

3 Important Notes Before You Begin:

1. Every Retirement Plan Eventually Will Be an IRA

IRA, Roth IRA, 401(k)No matter what kind of golden eggs you have qualified assets in right now, sooner or later they will become an IRA before you die most likely. (If not originally an IRA)  And most assuredly, after you die.

Most IRS publications refer to the required minimum distributions as "RMD" and most non IRS sources refer to it as "MRD" or minimum required distributions.  I  went with the IRS version most common on this website, but please understand they both are acronyms for the same minimum money withdrawal action you must take out after you reach age 72, or for your heirs the year after you die if they properly set up "inherited IRA" type account's.

2. Most Inherited IRA Books Will Further Confuse You

You are going to learn more here than most books that may just confuse you.  Any book published before fall 2019 will have incorrect tax law and applicable IRS rules stated. The inherited IRA field is the most complicated area of financial advisory so I have purposely tried to write in a format that will "spoon feed" you so you don't choke on the complicated subject matter you are about to read. 

For some, you will notice the redundancy and I apologize for it.  It is intended for you to learn and "know" what you are doing if you try to do this on your own.  And, some will get confused just the same, but I must say, it doesn't get much simpler than what you are about to read.

If you don't understand the content fully, let me be the first to say you should seek an outside (not associated with the deceased) adviser to help you! Obviously, I hope you choose me!

3. Outside Help Is Sometimes Necessary

When my firm is hired as your consultant, sometimes an additional inherited IRA adviser must be brought in for legal or tax issues that are beyond the scope of my firm's advisory services. My firm is acknowledged and well respected in this field of professional advisory. I personally promise I will always inform you when a referral is required. An example would be making a legal referral to an attorney in your specific state when legal actions might be deemed necessary. (Rare event)

FSI has made numerous referrals to other "IRA Experts" over a long history of operation. We were profiled in Natalie B. Choate's Spring 2012 newsletter and know she too is keeping an eye on our services. She may be available on some of those insanely complicated "trust as owner" cases that come up from time to time. We also have referred and worked with tax and legal staff of Roth IRA expert and Attorney and CPA - Jim Lange on past cases that needed that extra "push".  To date, all cases using additional advisory have succeeded in accomplishing the tasks at hand. (Normally the legal staff at the custodial firm gave in to us without legal action)

Whatever you do, avoid these 5 mistakes on your  Inherited IRA...

These Are The Five Biggest Mistakes We See On Most Inherited IRA Account Cases

Inherited IRA mistakes happen easily


Many financial advisers will tell you lump sum taxation is necessary upon the death of an IRA owner, when in fact -- most times it is not. But the human element of grieving, or just the stress of estate management can leave beneficiaries vulnerable. You may not know the right questions to ask before signing paperwork that is not in your best interest. That inherited IRA paperwork, which is most often "wrong" when first sent out, WILL tax the money instantly if a "lump sum" distribution is checked.  If not a spouse, yes you only have 10 years to pay the taxes due on the money you inherited as a non spouse beneficiary. But that 10 years is 10 times better than 1 year when a bad advisor tells you to cash in your IRA account inherited in a lump sum distribution. Tax brackets often jump wildly when you do that!


Well, they may not be outright lies, but untruths easily come from the very people now holding the money. Sometimes they tell large IRA account beneficiaries that they will need to just stay on the same Required Minimum Distribution (RMD) schedule with their inherited IRA, as the now deceased IRA owner was on. 

That makes for a real easy succession of keeping the money under management or "in house". But, in almost every case, it isn't true or proper! That means instead of resetting account mortality "age" to YOUR birth date - if you are younger, you will have to draw money out and tax it faster than what the IRS requires.

Sometimes, we also find the custodian telling beneficiaries that they have 5 years to take the funds out and pay taxes on them even when the first RMD (or successive RMD's) have already been paid out to the decedent who died. (IRA owner)  Not true at all. The five year rule does not apply to any decedent that was already on RMD's. In those cases, what the custodian has done has caused your missed RMD to be subject to the IRS 50% penalty!


You have to get a handle on the currently allowed concept of stretching an inherited IRA out as far as possible. RMD's run 2-6% of deposit amount depending on the beneficiaries age when an Inherited IRA is created. Now, as long as you can earn more than that each year, there is no depletion but instead - increases in the capital values of the account. So, if you are married, you can stretch out payments for your lifetime. Then, your spouse if he or she survives can draw out payments for their lifetime by doing a spousal rollover(ALSO CALLED TREATING IT AS IF YOUR OWN), thus never creating the "inherited IRA" registration at all. This means you can add years to the stretch period by doing a spousal rollover. (A spouse can also create an Inherited IRA upon the death of a spouse, but we can not figure out why you would ever want to do that even if the current advisor is teilling you to)

Then upon your spouse's demise, your children can draw out payments for 10 years if adults or 10 years after they become legal adults per their controlling state law. Special rules apply to non spouse beneficiaries that are less than 10 years younger than the deceased IRA owner and for persons that are defined as "disabled".  Those rules may need court case interruptions as they are not solid at least regarding stating clearly who qualifies as "disabled".  Keeping your Inherited IRA going for generations used to make a lot of sense.  But now with the new rules for 2020 and beyond, just getting it set up to stretch paying taxes due on withdrawals at least 10 years out is important to set up properly.  

4. Misunderstanding Trusts

The current misunderstanding that is present with custodian staff regarding paying the death benefit to a living trust is legendary and shows no sign of letting up soon.  Few IRA's should have ever been pointed towards the family trust in the first place. But now that the Supreme Court has ruled that individual owned inherited IRA's are now subject to bankruptcy court "reach" as well as exposed in general to the beneficiaries creditors - this mistake will only get worse as more family trusts are named as primary beneficiary by law firms drafting estate planning documents.

That is because the latest opinion is that a trust owned Inherited IRA will still exempt the funds from "reach" since the individual did not take possession (ownership) of the funds directly. That legal theory has some holes in it... but if you draft a trust for that reason, be sure you give discretionary rights to the Trustee to maintain a "accumulation" trust for that purpose.  And watch the language about paying the trust bills and closing it down. Can't do that if your IRA is pointed towards the family trust or conduit trust inside a family trust. It is always better to use a stand alone inherited IRA trust and be willing to pay the high fee to set one up folks, understanding it's life span may now be only 10 years. Trusts as primary beneficiaries for disabled persons makes sense since the stretch period may exceed 10 years possibly. And trusts are great for protecting capital if managed properly and honestly.

Due to gross misunderstanding by all parties, when a trust is listed to receive large IRA death proceeds -- things can go wrong -- fast. Assuming it is an IRS "qualified" trust, you won't be able to use your own age...unless you are the only beneficiary. You see, multiple sub-trusts are required in the actual instrument to leave IRA money  "per beneficiary", otherwise ALL Required Minimum Distributions (RMD's) will be based on the age of the "oldest" beneficiary listed. (Pray it's not your 85 year old Uncle...) 

The trust needs to be a "conduit" trust to be most effective as a recipient of IRA death claim proceeds. And, it must be deemed "see through" by passing 4 distinct IRS rules  -- all to reset the age basis for those IRS required withdrawals you must start taking the year after the year of the death. Even still, the trust must allow for trust continuation terms that do not conflict with non IRA asset distributions.  The new Secure Act did not change "see through" rules for trusts.

5. Making Decisions Too Fast or Too Slow

Timing is the key. After the death of the loved one leaving the IRA account or accounts -- take the proper time to grieve.  Then start researching your options early as a few deadlines loom. One is to remove any mandatory RMD from the account (you can take it from just one account if multiple accounts exist) before you try to take possession in your name as an inherited IRA.

But don't forget the deadlines the year after death, especially if the death was late in the year. Time can run quickly settling an estate. Two areas must be addressed the year after death. First, the beneficiaries have to be "purified" by September 30th of the year following death. This just means if any listed beneficiary would disqualify the trust from receiving IRS "qualified" status, it can be remedied if you remove that beneficiary or pay them out before this deadline.

Another deadline looms in trust owned IRA scenarios.  You must be sure the trust documents are in the hands of the custodian by October 31st, in the year following death.  And most times, certify as Successor Trustee in writing that you deem the trust "see through" per IRS rules. Otherwise, the custodians out there have a bad habit of telling you a "Private Letter Ruling" (PLR) from the IRS is required before they can act.  If a custodian just told you that before reading this web page, please call me. (1-800-782-2806)

Example:  Your father left a large IRA to be paid 1/2 to his living trust and the other 1/2 to a local charity.  The charity must be paid out by September 30th in the year after death otherwise the trust will be disqualified for "see through" status. 

"Qualified" status is an IRS term that means the trust that receives the beneficiary payout must meet 4 specific rules in order to be treated as if it was an "individual" for RMD purposes.  In a perfect world, that means you get professional trust management and long endearment from your loved one for income payout (though taxable) as well as potential money management -- all these benefits plus resetting the RMD age to hopefully, younger beneficiaries. (The age of the oldest trust beneficiary dictates RMD for ALL trust beneficiaries) 

Tip:  Don't name your children with your father or grandfather as trust beneficiaries if a large IRA is made payable to your trust!!!

What is "see through" status?  Simply, it means the trust can be disregarded for RMD purposes and the IRS will only see the listed trust beneficiaries instead as IRA beneficiary/ies. But now the 10 year payout rule will apply if any trust beneficiary can not be granted an exception.  Custom IRA stand alone trusts more than ever should create sub-trusts for each child to be able to determine status if any child is disabled prior to the death of the IRA owner.

You can also sign paperwork too quickly that is pushed upon you by the former financial advisers who will want to make a new "sale" on YOUR money. This can happen in just weeks after the death if you don't guard against it. You have at least a year to do anything. Don't let anyone push you into doing something you don't understand -- until you fully DO understand what you are signing.


Inherited IRAYou can read more about some actual client cases with faulty trusts in the Wall of Shame website page. 

And find out what it is like dealing with an insurance company who doesn't know which end is "up" when it comes to proper administration of an IRA death claim.

Or, experience the frustration of having a sister with sticky fingers. Instead of protecting the family trust wealth as Successor Trustee -- she is spending it! 

Baby Boomer Bonanza or Bust?

Hippie Baby BoomersBack on 12/28/10, the Boston Herald quoted that 10,000 baby boomers in 2011 will hit retirement age each day -- for the next 19 years! Adding in their own 401-k, SEP, 403(b) money with what they inherit from parents, the total sum for some families will be overwhelmingly the highest percentage of their estate assets!

What is important here is to note that too many investment only advisers are just plain ignorant about the taxation issues! And, because they are not tax experts, and few are inherited IRA experts (though some took a class that says they are), bad things are happening as this money comes out of the estate settlement process.

Law firms farm accounting tasks out to CPA's on larger estates. Even CPA's have been sleepy, but they are waking up fast! Many professional tax advisers read this information site and respond to me often, knowing they can count on the information I publish.

Instead of using the "S -- T -- R -- E -- T -- C -- H" IRA concept (albeit shortened to just 10 years for most now) and investing in a new "Inherited IRA" account with the current or proposed account heir -- still too many money advisers often tell the heir after the death to pay taxes on the money and invest the rest with them! (Lump sum = Big Tax Bill)

This can amount to a quick 40% cut for the IRS and state taxing authority and a 60% remaining cut for the new account owner. Many times, professional advisory isn't sought out at all. Needless taxes are paid on these IRA transfers that often are very large  -- and Inherited IRA Hell stays very busy with new arrivals of victims every day!

O.K., boomers, you may still be wild and crazy and trying to relive your youth any way you can. But not being careful with your own retirement money, or the money you inherit from a parent, especially IRA money -  well it may be an expensive trip sort of speak you will regret later.

I want to warn you of a pitfall. Insurance agents run big ads in the paper and in magazines hoping baby boomers will respond.  The message tells you to sell out your IRA accounts. (Traditional or inherited)  They can easily trick you to think you should pay the tax, and invest what is left with them. And the product they are pushing is nothing more than permanent life insurance with big commissions to you and a big tax bill for you.

These simple, greedy salesman disguise themselves as "wealth advisors" which sadly, translates in the real world to "insurance agent". They ignore or else don't have the mental ability to understand the concept of a potential perpetual and increasing income stream for almost an entire lifetime. And another lifetime as well if you leave your IRA money to an inherited IRA for your children.

The longer government standardized mortality tables (Newest is the 2017 CSO Mortality Tables) just made it even more lucrative to keep this money tax deferred all of your life and then let your children continue your Inherited IRA balance after you are done using it for at least another 10 years under the new law.  DON'T BUY WHAT THEY ARE SELLING AND LUMP SUM CASH IN YOUR IRA! . It is illegal to present life insurance as an investment, so don't become a victim just because the salesman has a slick presentation and a silver tongue.

10 Rules To Follow For Best Results

Rules for Inherited IRA

Rule # 1:  Cross Check the Facts

It is best to understand that the information you receive from the institution that is custodian of the deceased IRA account is probably wrong!  Seek another opinion from another qualified professional inherited IRA consultant independent of the firm just to be sure you get the facts right before you accept and execute documents with the current custodian.

Rule # 2:  Register the New Account Properly

Note: Multiple beneficiaries holding the same account would be in the "plural" for registration purposes. Also, note the words "Inherited" or "Beneficiary" are commonly placed in front of the word "IRA", depending on the firm.

Trust registrations are more complicated and are not produced here for that reason.  Registrations are commonly truncated due to database limitations of institutional firms. The IRS fully supports any truncation as long as it is reasonably possible to still determine the account title name.

Examples of non-trust proper titles for Inherited IRA's will vary with the different institutions who hold the money or who you transfer the money to.  All of these would be options acceptable by IRS standards depending on which firm you are with (or go to):

"IRA FBO Fred Jones as beneficiary of John Jones"

"IRA FBO Fred Jones (Beneficiary) of John Jones (Deceased)"

"Decedent IRA FBO Fred Jones, beneficiary of John Jones."

 Or starting with "Inherited IRA... "

Or starting with "Beneficiary IRA... "

Truncated Sample:  "IRA FBO F. Jones (Ben.); of J. Jones (Dec.)"

Tip:  Never let the decedent's name be removed! If it doesn't show on executed documents, your new inherited IRA is in violation. If you discover this the year after the year of registration, you better call me. You are in Inherited IRA hell, you just don't know it yet.

Rule # 3: Transfer Your Inherited IRA to a "More Friendly" Custodian if you Have Problems

If you inherit an IRA that is held with a custodian or trustee that does not allow you to stretch distributions under the options provided by the tax code,  you can usually transfer the inherited IRA to a custodian or trustee that does.

Try to complete the transfer before Dec. 31 of the year that follows the year in which the IRA owner dies, so that you can make any required RMD elections on time under the new IRA agreement.  Always move the money via a trustee-to-trustee transfer. Trying to do a 60 day rollover will cause instant lump sum distribution rules and instant taxation. (Inherited accounts don't have that privilege) 

Normally, only 401-k accounts which recently became eligible for inherited IRS status are sometimes restricted by the trustee on whether non taxable transfers are allowed. Sometimes, the "agreement" with the company may restrict you.  For example, a client of ours was forced in 2014 to take over $400,000 of taxable income from a GM 401-k plan for his deceased mother all because they didn't allow rollovers in that particular case which was payable his deceased mother's estate.

TIP:  If you discover 401-k plan money for your deceased loved one who was also born before 1936 -- check with my firm to see if special IRS 10 year averaging applies.  This option allows cashing in with lower tax rates on the distribution you receive as well as special capital gains tax rates for any pre 1974 contributions made into the plan. It may extend to you as a beneficiary inheriting the IRA, but specific checks must be performed to determine your eligibility.

If 10 year averaging doesn't apply, you may still be eligible for a 5 year payout to reduce the big bite of taxes on a lump sum distribution, but only if the decedent died before reaching age 72.

Noting: The facts of your case must be reviewed by a professional inherited IRA adviser before options can be fully discovered and tailored to your actual situation.

Rule # 4: Excluding the Decedent's Name from the Registration does not Necessarily Make the Amount Taxable

Contrary to popular belief, transferring the assets into your own non-inherited IRA account does not necessarily result in the amount being taxable. It's true that the IRS requires the inherited IRA to be registered in the combined names of the decedent and the beneficiary. However, if the assets were transferred into an IRA in just the beneficiary's name, that can be easily corrected as long as the funds are not commingled with non-inherited-IRA assets. 

In other words, if you transfer it into a non-inherited IRA account that was already funded, it is too late and you are in Inherited IRA Hell by default most likely. As long as it was a new account that wrongly forgot to include the name of the decedent, the correction can be accomplished by simply adding the name of the decedent to the registration by the firm.

Be sure to have this mistake corrected before they have to report the status to the IRS by the end of the calendar year. Under federal mandated tax statutes that apply, automatic account reporting has been required since the late 1990's. 

Rule # 5:  Distributions from Inherited IRAs are not Subject to the 10% IRS Penalty

Distributions from inherited IRAs are not subject to the 10% early distribution penalty, regardless of the age of the beneficiary at the time the distribution occurs.  Also, to be sure no penalty happens, the IRA custodian or trustee should code or flag the inherited IRA, so that distributions are reported as "death distributions" with a code 4 in Box 7 of IRS Form 1099-R.  Without that exact coding, there is a problem that has to be corrected by obtaining a corrected 1099-R in order to avoid faulty tax reporting of income.

Also, don't let any tax adviser convince you regular inherited RMD's are subject to the early distribution penalty. You wouldn't believe how many don't know this...

Rule # 6: Stretch Your IRA!

This rule applies to all types of IRAs as long as certain circumstances are present. But, I will just address your new Inherited IRA account here. Once you have your inherited IRA at a beneficiary-friendly custodian or trustee, you will be using the  single life expectancy chart for RMD payouts. And the stretch period is most likely just 10 years.

But, you can determine when and how much to take out during the 10 years. One could easily assume that 1/10 a year of balance prior year on December 31st was a good plan under the new law.  Yet, flexibility is important. Just don't forget that it ALL HAS TO BE OUT by the end of the 10th year now.

The long super stretch on a young grandchild of 80 years or more is over.

 Rule # 7: Watch the RMD IRS Requirements and Trustee Rules     

Your inherited IRA trustee doesn't always allow what the tax code and the IRS allow. The tax code and IRS regulations allow the beneficiary two sets of distribution options for inherited IRAs:

Option 1. If the IRA owner dies before the required beginning date (RBD), for required minimum distributions (RMD) -- the beneficiary can distribute the assets within five years of the owner's death, or over the new 10 year period as well if set up on time. It is the opposite of taking out a mortgage for 15 years instead of 30 which was traditional in the past. Stretch IRA withdrawals out as long as you can.

2. If the IRA owner dies on or after the required beginning date, the beneficiary can take distributions over the 10 year period, unless a spouse who can re-date the payouts to match his or her life expectancy (treat it as his/her own), thus stretching the payouts further than 10 years.

The problem is that not all IRA agreements (offered by the trustee) allow these options.  In fact, it is quite surprising just how limited some trustee agreements are.  In April, 2012, our firm discovered a brokerage firm that had to create inherited IRA paperwork, just to pay the death claim for our retained client. Custodians can force you to take a distribution within one year of the original owner's death if you don't challenge them. (We provide the legal referrals to do that) (This was even covered in a Wall Street Journal interview done April 2012 by Mr. Anderson)

Also, you have to be careful if the original IRA owner (the decedent) was required to take a distribution in the year of death and didn't. Then the beneficiary must take it before any re-registrations of the inherited IRA account (or transfers) takes place. (Insurance agents also call this the "death claim" filing or process)

To be sure you are informed on tax law regarding IRA's, you can find the rules about distributions in IRS Publication 590.

Tip:  It is smart to check this stuff out BEFORE signing paperwork!  If you don't like the terms, go back to the # 3 rule above! But hire us to assist you as the process is onerous. And dangerous without professional guidance each step of the way!  (Inherited IRA Hell awaits those that fail to abide by this rule more often then you might think)

Rule # 8:  Inherited IRAs Cannot Be Commingled

Be sure you keep any inherited IRA funds separate from your own. You are not allowed to combine inherited IRAs of different types. For instance, you cannot combine a traditional inherited IRA and a Roth inherited IRA, even if they were both inherited from the same person.

Also, if you inherit multiple IRAs from the same person you can combine those IRAs into one inherited IRA account.  But, you cannot combine assets inherited from different individuals into the same inherited IRA account.

Rule # 9:  Don't Try a 60 Day Rollover

Remember there is no 60 day rollover period since there is no constructive receipt of the funds.  With Traditional or Roth IRA's you may own, you can take a distribution out and put it back into the account as long as you do so in a 60 day time period. 

Using the IRS 60 day rollover procedure for short term expenses perhaps, the IRS allows you to avoid taxation and penalty. Try this with an Inherited IRA and there is a 100% chance the IRS will tax it.  (And the IRS will also know about it because the institution by federal law must report end of year value and status directly to them!)

I previously mentioned a financial reporter told me she was told by an IRS enrolled agent that YOU CAN use the 60 day rollover provisions on inherited funds.  I hope he has good E&O insurance...  

Rule # 10: Maintain Proper Beneficiary Elections on Your Account

The beneficiary form on an IRA is the first and most important part of receiving the death benefit payout from an inherited IRA.  If your loved one failed to name a "living and well" beneficiary on their own beneficiary form the "stretch" concept may be restricted. I will assume for this rule, that they did name you properly as one of the beneficiaries, or as the sole beneficiary. 

Note: We can suggest ways to customize your beneficiary form, perhaps adding some important legal language that further protects who gets what when you pass away. This is done as a licensed and certified document preparer (In the State of Arizona) and we must be assigned as a "paralegal" to your legal representative to perform this service for you, if you are not a resident of Arizona. We must consult directly with your legal professional in your state. (FSI is not a law firm, nor do we practice law. Instead, we refer legal questions and needs to some of the best Inherited IRA professionals in the United States. Actually, they are the book writers -- and are the best!!!)

After becoming the owner of an inherited IRA, you have to think about how that account fits into your own estate plan and financial matrix. Deaths, divorces, remarriages or the birth of children are reasons to re-evaluate who the beneficiaries are on your inherited IRA account as time marches on. And to consider the legal protection afforded, and recently re-determined by an Arizona court, to use your IRA or inherited IRA as an asset protection device from creditors. (Most other state challenges to date, also conclude IRA funds, even when inherited, are exempt from creditor claims) 

Special Closing Note About the Rules:  In some cases, you might want to "disclaim" the IRA you've been notified you have inherited according to some legal experts. All of these scenarios require a valid contingent or secondary beneficiary to be listed and available. (alive and well)  Cases where this may be practical would be:

1. To keep the inheritance out of your estate for estate tax purposes. (WHICH MEANS YOU ARE LOADED MONEY WISE)

2.  Depending on state law, to keep the inheritance from being subject to your creditors or state inheritance tax imposed by some states.

3. To save income taxes if the contingent beneficiary is in a lower income tax bracket.

4. To get the IRA to the deceased IRA owner's surviving spouse (perhaps as the contingent beneficiary) so he or she can roll it over, name new beneficiaries, and thus -- get a longer stretch-out period.  And possibly so they can convert to a Roth or so that the funds will qualify for the marital deduction under the estate tax laws.

Tip:  I can help by making a professional referral to a qualified Inherited IRA lawyer if you need their legal services in this area of discussion.  All of these cases for a legal "disclaimer" would warrant a reason to have a professional legal conference. (And most likely other scenarios not mentioned here)

5 Inherited IRA Management Concepts To Assure Long Life Of The Account

Once You Avoid First Year Taxation, Proper Management Begins. And, It Never Can End!

Life never stops.Now wait, before you think about just paying the tax and being done with it -- it isn't that big of a deal to learn and practice proper Inherited IRA management. Especially if you find an IRA expert that is around your age or younger to be able to help you many years into the future whenever laws or circumstances change. This tether to an adviser could cost a little in advisory fees, but as you are about to learn, the true secret of why management is so important is coming up next.

If you live to 103, where will your money be? With you yet.... or long gone? Planning for lifetime income from your Inherited IRA should be done right now. They say the difference between an old man and a gentleman, is just a few bucks in his pocket! It is true, and you need to set you and even your survivors up for life! (Or at least keep your Uncle Sam at bay as many years as possible here)

You are about to learn why a stretch Inherited IRA is just about the hottest ticket you can hold to family wealth in the case of large Inherited IRA accounts. Once set up with the right adviser and the right trustee (institution/custodian), proper management secrets can all but guarantee success!

At this point, I assume you have figured out you are not in Inherited IRA Hell, at least not yet. If you are close, you won't be the first I have helped pull back from the flames licking at them!

But, if you think you ARE in Inherited IRA Hell, you probably are now calling your attorney. Or, crying a lot at the very least. Just don't forget to let me know the situation too. Sometimes people and/or their advisers misconstrue the deadlines and the rules and still cause themselves needless stress or eventual taxation. As long as the check isn't cashed, I would almost be willing to bet you still have some wiggle room...

CONCEPT # 1: Drawing Down Principal In The Early or Mid Years of the Account Would Be a Grave Mistake!

Watch your IRA like your Matt Dillon!O.K., I admit, I grew up watching Gunsmoke on TV and if any man knew when it was the right time to draw out his gun, it was Marshall Dillon! Well, I want to use Matt as the mental picture you must imprint in your mind about how and when to draw money out of your new Inherited IRA. Your inherited IRA withdrawals should only be pulled out when you desperately need them.  (beyond RMD)


Unlike the accumulation years and retirement years the original retirement plan owner enjoyed tax deferred growth in the account/s, the new Secure act may limit your entire time to remove all Inherited funds in just 10 years. This concept doesn't work well in that case.

However, if as an Inherited IRA beneficiary, you are one of the exceptions, the concept applies since you should have your entire life expectancy to withdraw all funds from an inherited IRA account.

Warning:  If you just re-titled your inherited IRA account and find your  deceased owners' name is not on your new account, (if your new institution or account removed the original IRA owners' name, you are are very close to being in Inherited IRA Hell -- be sure the deceased name is put back on!), you need to get that changed right away, before they report it to the IRS at the end of the year!

Now, the truth concept so important in the management of you new account:


If you have more than 10 years to stretch your inherited IRA payments, you now have complete and total control of the funds (or will once you hire us to assist you). And, you are ready for this truth. Said another way, "don't cut off the hand that feeds you". The minute you begin to deplete principal, your days of ever increasing income on an ever increasing principal base are numbered! So, if you have all or part of your Inherited IRA in a fixed bank or insurance annuity account, just don't ever pull out anything but interest earnings for as long as possible. 

Obviously on low earnings accounts (both fixed and variable), RMD can deplete principal.  But, you always have the option to shop around for better rates or terms to get the performance up so principal can remain in tact or better yet -- grow with interest earned above the annual RMD withdrawals.

CONCEPT # 2: Make This No-No on a Securities Account and Watch Your Retirement Income Die Long Before You Do!

RIP for your IRAThis concept is kind of a continuation of the first, but it applies only to variable type accounts. Namely, you have to adjust for losses drastically or the loss, especially incurred early on while paying out retirement income, will destroy the very "money tree" that can otherwise feed lifetime income to you and your own named beneficiaries of your inherited IRA account.

Failure in this area can commence any year values drop, yet many advisers and their clients remain unaware and don't adjust.  But it may be early enough to catch the mistake before it gets too serious to stop, in your specific case. This whole field of specialized Inherited IRA advisory is still new and emerging so there isn't a big rule book on actual practice you can seek out and find easily.  (If I write one some day - would you buy it?)

Your grandfather and great grandfather knew the concept real well! You don't spend more than you make while you are earning a living. And, you don't spend more than you earn in interest and dividends, once you retire! Failure to adhere to this -- the oldest and wisest of money concepts spells early death of the account!  (Maybe the U.S. Government should be reminded too)

I am going to show a chilling example so you can grasp this one at full value. If this shakes you up and maybe wakes you up as much as it did me, I would declare that your time has been well spent reading my free information!

In this example, the client has retired on a $100,000 nest egg Inherited IRA (could be any kind of account as well) that avoided immediate taxation because of having a smart money adviser. His money is in a brokerage account averaging 12% a year for a 10 year period and the client is taking out an annual 12% withdrawal for retirement income or combined RMD and additional retirement income purposes.

Now remember, this example below applies mostly to those who received an exception under the new Secure Act provisions.

The question is this: How much money would the client have in this Inherited IRA at the end of 10 years?

THE ANSWER IS: $40,641!!!

I'm sure your answer may very well be the same as mine was, when this example was proposed to me. I answered "$100,000!!! After all, for those of us from IOWA that learned that mental math so well -- it is the only logical answer!

But, in this example, it is very wrong! You see, one little detail was left out. I didn't yet tell you that in the first year of the $12,000 withdrawals, an average loss in the portfolio occurred in the amount of -10.5%.

Here is what actually happens when an adviser wrongly assumes you need to use an "accumulation" portfolio strategy when in fact you may very well need a "guaranteed or partially guaranteed income" portfolio strategy:

Inherited IRA RMD Table

This chart shows that a single loss in the first year -- even with nine consecutive years of double-digit gains--causes a loss off nearly 60 percent of that $100,000 original Inherited IRA account you inherited!

In a typical "long-term" investment time frame (cycle) of 10 years, you could easily expect another year with a loss. Even without any more loss in this example, your payments would stop in just 4 more years and the account would go bust!  (if more than 10 years are allowed under the Secure Act provisions)

It is easy to surmise that your Inherited IRA will die from the 10 year forced withdrawal schedule forced upon you now as an inherited account beneficiary if no exceptions exist for you to qualify under. (They give you more time if you are chronically ill, disabled, a minor child, not more than 10 years younger than the decedent IRA owner, or a spouse treating the IRA as their own). But at least you got all your money out. Investment loss's not recovered are like a thieve you never catch. Remember that when you broker calls and tells you they have a hot investment for you...

Clearly, the accumulation logic so commonly practiced while you put aside retirement assets will not work in the distribution phase of your retirement years. While the rules for accumulation focus on dollar-cost-averaging, and tax-deferred growth, the economic attributes of the distribution phase are: guaranteed income streams, longevity risk management, upside growth opportunity, downside protection for life, and principal protection (preservation). I repeat that last rule. PRINCIPAL PROTECTION!!!

Send your adviser to this site if you have to, to remind them "why" you don't want your IRA invested where the chance of loss is very high. Or, at least adjust what you take out so you never deplete the principal. Or, if you live in Arizona (we also license in new states when clients ask us to assist them in investing in fixed annuity contracts), call me toll free at 1-800-782-2806 to discuss some refreshing options that offer stock market type returns and guarantee NO PRINCIPAL loss by using fixed indexed annuities!

CONCEPT # 3: What You Invest Your Inherited IRA Money In Matters Greatly as Well as Who You Invest It With!

An Inherited IRA is a cash cow.Your Inherited IRA is a cash cow! To keep it producing income for even if you the new 10 year rule dictates the money will have to experience full taxation by the 10th year. After taxation, you still will have a nice account balance most likely which unrestricted from harsh tax rules can last your lifetime and belong if you are careful in what you invest in. And who you invest with. 

What you decide to invest in matters. One area that I am convinced is a good area, is in real estate. Now, before you judge me, let me say I have an Arizona real estate license. I am also a Realtor® and am a member of local, State and National Real Estate Associations. I work for a large well known real estate firm in Tempe, Arizona.

I have to take more continued education courses than anybody I know to keep up to date in the multiple financial services (licensed) that I practice in. And lastly, I have practiced in financial services and planning for over 45 years! So, I DO understand the funding vehicle of "real estate" as a possible choice for your IRA.  

What I am talking about is a self-directed type IRA account. They are not for everybody. But, they are popular and custodial firms are now receiving millions of dollars in funding so clients can go out and buy "local" real estate properties in their own IRA accounts. Or anywhere else for that matter!

It's true, an IRS rule prevents you from depositing "new" money for project expenses unless they are qualified deposits into the IRA for tax purposes. And another rule says you can not have any "self-dealing" which just means your self-directed plan can not benefit you and your circle of relatives related to you. Real estate is a fine investment in the right context. Modern financial advisers serving their client's best interests first, now see real estate as a good home for diversification purposes.

Few real estate ventures work out very well when the owner is removed from the day to day management of the project but with a self-directed plan, IRA owners can keep their eye on what they invest in, sometimes literally. One can buy a rental property on their own block with their IRA and drive by it every night when they come home from work!

Caution is needed to use IRA consultants before investing any money into a self-directed IRA account no matter how attractive it may look. Getting it wrong can cause up to a 100% tax penalty!  My firm is available on retainer to review any proposal others may give you for this, or to help you if you are researching self-directed IRA investing into real estate at this time. And of course the entire project may be limited to a 10 year life span since the Inherited funds used must come out and be 100% taxed by the end of year 10 under the Secure act. (Unless exceptions apply)

CONCEPT # 4: Something Drastic Happened, and Most Money Advisers Are Still Asleep! Why Your Inherited IRA May Need Guaranteed Income Planning!

Many IRA Advisors are asleep!In the past, advisers and consumers alike were motivated to buy investment products that could accumulate money for their eventual retirement. The concepts were always that if you have enough principal by the time you reach a pre-determined retirement date, you would also have enough interest earnings as well to pay retirement un-earned income to yourself, along with any pensions and social security benefits.

The idea of a guaranteed income was not a preliminary planning concept or at least it always seemed to get overridden with "accumulation" planning. This of course meant that the products offered to you as the investor in the past had great accumulation potential and features -- but was severely lacking in any kind of guaranteed options. So you or your survivors could be reasonably assured a monthly income check would never stop coming!

Well, the baby boom generation changed that once and for all. This generation does not have the guaranteed pension income their fathers had. They have their 401-k, which is mostly their own money. And, after 2008, those accounts have been "back dated" in values have they not? Recent recovery of lost values and big gains as well in equity markets could once again take a big plunge.  We already proved above what a one time loss can do to investment money.

Baby boomers don't have as much in accumulated assets as their parents had, and they very likely still owe money on their home, even if they are now nearing retirement. And sadly, credit cards in their wallets stay a lot more active compared to their parents, who rarely would carry a credit card balance. (or even posses the card) So, many boomers will carry those negatives right into their retirements!

Of course, the average baby boomer inheritance from their parent will be a nice "catch-up" money deposit for many who did not do as well financially as their parents. But not everyone can count on that, even if their parents or parent have a sizeable estate. Nursing care and last illness expense costs can easily deplete a children's inheritance before the parent dies. (and occasionally, the new "spouse" if widowers or widows remarry)

So baby boomers should and must plan for the most part  -- in putting together a solid retirement package on their own. They need to get out of debt. And, they need to find better guaranteed sources for retirement income that will not stop producing retirement money -- no matter what! Money trees need watering (upkeep) to keep producing. Fail to manage your money tree during retirement years -- and most likely -- it will manage to fail in your absence, sooner then you might think.

Income planning is even more important when you factor in the larger medical costs seniors have to pay out of their pockets and the higher cost of living we all must pay just to maintain our private residence. Yes, future income needs of baby boomers looking at retirement in the near future are a real and present need that can no longer be ignored by them or their financial advisers! Guaranteed options you can't outlive are now available by using fixed annuity contracts.  I can tell you more about that and give you a quote if you want one, later, once you properly review your inherited IRA options first. (coming up next)

FINAL CONCEPT # 5: Follow The Rules!

Note: These will include a mix of the concepts I covered on this site along with other important information you need to know. They do not address spousal rollovers which are wrongly classified in the press sometimes as being an inherited IRA. To be technically correct, please note that non-spousal beneficiaries most commonly create the inherited IRA accounts under IRS rules. Yes, a surviving spouse could create an Inherited IRA instead of treating the account as their own (and rollover into their name).  But why?


You can call me with questions at:


Flight To Safety, Path of Pain, or more Unbelievable Gains?

Stock Market Crash

Many investors have received record gains in 401-k plans and other equity type investments over the past few years.  Sudden flights to safety by investors can unduly lower values as what may have recently happened in 2020 last month. (Feb 2020)

Big gains can go south quickly again if things get out of hand in world markets. Sooner or later, what goes up does come down and adjust. Then at least in the past, it goes up again. Inherited IRA accounts can invest in "hard assets" for those wanting to diversify.  

Investing in hard assets such as REAL real estate properties with current IRA dollars makes a lot of sense for those currently sitting on the sidelines or looking to get out of or lower their stock market positions now.

Buying low and selling high works well in both securities and with real estate used for investment purposes. One thing is for sure, no one is going to watch their purchasing power sink to near zero without trying to do something about it. (DON'T WAIT UNTIL THE BARN BURNS DOWN TO MAKE CHANGES!!!)

Inflated currency values is a great way to watch you hard earned IRA funds and any other money accounts -- sink down, down, down a path of pain that so many around the world have experienced in devaluation of currencies. Some countries now have a negative rate paid on their bonds. They say the price for "safety" of principal in America may also be introducing negative return investment accounts. (Ask a  finance professor who smart that sounds)  Even if the dollar devalues slowly, it doesn't mean your purchasing power hasn't been hurt. it's like a small hole in pocket...

Of course, the main importance right now is to allow YOU to find an adviser who understands what they are doing and... who they are doing it for. And, an adviser who knows the specific companies who will be willing to receive your new "Inherited IRA" account funds and take care of you the best way possible. (There are only a handful that can be trusted with large Inherited IRA transactions)

In other words, he or she knows from experience which companies are best suited for your needs and is trained and experienced to handle these accounts. Since advisers and firms  are not fully up to speed in this extremely complicated area of finance, you will need to shop for more than just the best "rate".

Yet, like so many times in real cases, you can also use my firm to help your current advisers regarding your Inherited IRA funds that may now need attention. However, if you can't get your current financial advisers to perform correctly in this hardest of all areas of finance -- give me a call at 1-800-782-2806.


Hey, Don't Accountants & Lawyers Fix These Things?
Inherited or Beneficiary IRA.Yes and no. Yes, they can usually stop the needless taxation if they are consulted early and if they practice in this area. But, no, they usually don't get asked to help until it is too late.

Hint: Once the IRA money is on fire, it is too late!

You see, many times, the existing investment adviser/agent/consultant/banker may be good at picking stocks and bad at understanding tax issues and their implications. And, many don't want to lose control, so they tell you the money you inherited has to be taxed!

This lack of knowledge, lack of caring, or outright abandonment of normal due diligence creates huge problems as well because outside accounting and legal advisers get "bumped" from ever being in on the discussion until it is too late. When is it too late? When the check is cashed according to strict IRS rules! Only Inherited IRA Hell awaits after that...  

Inherited IRA Truths That May Be Too Hot To Handle By Your Current Advisers & Custodians

A.  If you ever get your physical hands on the money*, you have just entered INHERITED IRA HELL!

Rescue Your IRA Dollars from Inherited IRA Hell.By now, you most likely have figured it out. There are two types of IRA money advisers. Those that get it right. And, those who don't.

The first will keep you out of Inherited IRA hell. The latter has or will put you in there. Once there, your options are limited to taking legal action for any chance of financial recovery. The only tax write off is your state income taxes you paid on the taxable distribution, if you itemize on your IRS 1040! (And perhaps your tax and legal fees)

It is a hard fact that the IRS and your state tax authority (when applicable) will not give back your money. And the institution caused the mandatory taxation of the inherited IRA will not and can not reinstate the account after the fact. Once the check is cashed. It is set in stone!  (many ask this question, knowing pretty well what the answer is!)

Now, occasionally, a firm may register your new inherited IRA and forget to include the name of the deceased IRA owner who left your share to you.  These situations have been modified by the firm in those cases and most likely, the IRS is never aware of the mistake.  (Normally the IRS allows some leeway in the year of the mistake. Of course, we know some institutions mess the account titling up and don't correct it in the same year it happened. That most likely constitutes "constructive receipt" and if the IRS finds out-- they will want to tax the funds)  So, I personally recommend you have an expert read and review the paperwork before you sign it if you try to do this alone.

In cases of constructive receipt, regardless of how it happened -- you could try to file and hope for a favorable IRS "private letter ruling", but the truth is that the IRS is not in the business of feeling sorry for stupid mistakes made by administration departments of financial institutions and their employees or staff. Or by you as an ordinary tax paying U.S. citizen and IRA beneficiary!

When an IRA is payable to a trust, there may be room for a PLR from the IRS, to correct mistakes or language to manage the money that is often found "missing" in our client cases. But again circumstances need to stand between simple administration mistakes and arguable grounds in special cases that contain extenuating circumstances. Only the latter is worth paying the high fee and waiting for a hopefully - favorable answer in filing a PLR with the IRS.

* Otherwise known by the IRS as "constructive receipt"

B.  Not Every Adviser is Qualified in This Specialty Area of Practice!

Your current financial adviser might be worried right now if you ask him or her straight out --  how to avoid paying any upfront income tax on your inherited IRA account. They are worried because most don't really specialize in this area and therefore are prone to tell you it would be best to just pay the taxes on the money and cash the inherited accounts in.

It is malpractice and any smart lawyer will be testing the limits of the adviser's E&O liability coverage if it is later discovered by the client that there were more options than what was offered to you. Sadly, a sweet and wonderful lawyer client in Maryland hired our firm a few years ago to prepare court documents that proved the estimated total value of money spent on instant taxes paid on her inherited IRA.  We did our best work and provided the lost opportunity bottom line value well over 100k. But she became too sick to work on her legal case against the insurance agent and did not get the case filed in time before the state's statute of limitations barred filing a lawsuit. 

I'm not speaking in theory but in actual practice. In fact, in another actual case a few years ago, one of my clients was told by a Phoenix financial planner that his deceased father's large IRA account  had just one option -- the heirs would have to pay the tax and then reinvest what was left with him. Now, this case did involve a trust as the beneficiary, so it was a complicated matter. (But not for us)

My firm did the research and found the needed tax code elements in the fathers' trust to authorize account transfers according to the IRS rules. I helped find the way to conduct the tax free transfers and then assisted in the "drop down" re-titling to the trust beneficiaries under "look through" provisions in the code. When it was all done, I assisted the client so they cold perform the "drop down and out of trust" procedure on the accounts. This allowed us to fully close the living trust altogether, and thus, comply with the trust termination provisions!

We continue to repeat these procedures for clientele since then when IRA money is left to a living trust. Sure, it is extremely complicated. And that is the very reason you should do full research before you authorize anything! At the very least, you have until December 31st of the year after the death, as long as you don't do anything quickly with the original account your loved one had his or her IRA in! (But if the IRA funds are payable to a trust, don't wait until then to start. Important reporting requirements start as soon as Sept. 30th, the year after death)

Can you imagine the extra earnings and principal growth for about 40 years on the instant $120,000+ I saved the client case I mentioned? (IN CASE YOU WONDERED, ANY CASE WE SETTLED PRIOR TO DEATHS STARTING IN JANURY 1ST, 2020 IS GRANDFATHERED!) Without hiring our firm FIRST, that greedy uninformed former adviser would have cost an instant 1/3 or more gift to the IRS and Arizona Department of Revenue! Your case could be similar, so please don't dismiss the need for a first or even a second opinion.

This additional story from our closed case files from a few years ago had an interesting and unusual ending. I had to call the adviser mentioned to get some details on the case up front and was verbally abused by him over the phone. He called me a "bean counter" and told me to stick to counting beans and said I should not try to tell people what to do with their money. (I wasn't) He bolstered himself as an investment adviser professional and warned me that accountants like me should not butt in on his advisory services.

After the case was completed and the transfers and re-titling was done, I noticed a large ad in the Arizona Republic newspaper about two months later. The investment adviser was prominently promoting his merger with a CPA firm in Phoenix and introduced a brand new company! I didn't care to call for the details, but I can easily surmise that he got educated real quick in this case he lost control of and was never going to let it happen again! (RIA's hate to loose MUM $ (money under management) even when you die!

In other words, if you are a qualified adviser lacking in the ability to interpret these complicated tax issues, why create liability in guessing? I welcome your referral and would be more than happy to work with you. And, if you can team up with a good CPA or tax attorney in your own home area, don't ignore the possibilities as well in doing so. Just don't tell your client who just inherited an IRA that they have no option other than to pay tax on the money, unless you are 100% sure that IS the only option!

C.  Not Every Institution is Qualified Either in This Specialty Area of Practice!

Frustrated IRA advisor.It may very well be best to leave the money with the current institution that your deceased IRA owner had the money in. But, if that institution your heir had his or her money in is talking about the need to "distribute the money to you", this means full income taxation! In that case, you most likely need help in finding a new home! Stall them and remind them you have until the end of the next year after the death before you HAVE TO do something!

Also, if the current firm sells stocks and you like fixed assets for safety sake, you may need a new home as well. And the opposite may also be true of course. Too many times I see an heir take over an account at a brokerage firm that they inherited and never question what the money is invested in. Many times, a change of portfolio structure is needed, if not a full change in brokerage firm or other fiduciary institution home that is now holding the inherited IRA funds of the deceased. (Your broker should instantly offer a new suitability review or form to you in your first meeting. If not, find a new broker...)

And yes, you can move the money tax-free wherever you want in almost every case, you just can not take constructive receipt of the funds when it comes to an inherited IRA! There are no 60 day roll-overs allowed in this case, such as you have with a regular or traditional IRA account. SINCE AN IRS APPROVED ENROLLED AGENT CONTRADICTED ME IN A RECENT NATIONAL PUBLICATION INTERVIEW, I REPEAT: NO 60 DAY ROLL OVERS!!!  (He obviously is no Inherited IRA expert)

You can re-register the account as an inherited IRA, maintaining the name of the deceased owner on the account while you decide just where you really want to keep the funds. Well, this is mostly true. Lately, we have to "wrestle" with a few custodians to force them, (help them?) pay the death claim while still maintaining liquidity options so the money isn't tied up or hit with surrender or sales charges if or when you want to direct transfer it elsewhere.

Or, you can decide now -- the permanent home of your new funds during the allowed time and then make the "trustee to trustee" transfer required to keep the funds tax deferred as new Inherited IRA accounts. Either way is fine as the first step. Additional account management is of course required, including determining when the mandatory RMD (required minimum distributions) must begin in order to avoid penalty from the IRS.

A word of caution: If your deceased heir was over age 701/2 (deaths before 2020) or age 72 (deaths after January 1, 2020) and had not yet received his or her required distributions in the year of death, you really will need to consult with an Inherited IRA expert or at least an accountant or CPA to be able to get this matter taken care of before any possible transfers are anticipated. The institution normally will catch this detail, but keep watchful eyes on them to be sure they DO Distribute the deceased heirs' RMD prior to your trustee to trustee transfer request being given to them. Or, if you leave the funds with them, before you re-title assets with the same IRA custodian.  

Basically, any institution that transfers your inherited IRA without fully paying out 100% of the yearly RMD prior to the transfer to the listed beneficiaries, causes problems upon themselves and problems for you too as the new heir and owner of the account.  BE SURE YOU HAVE WRITTEN PROOF AND CHECK THE MORTALITY TABLES BEFORE AUTHORIZING ANY TRANSFERS OUT!  (For multiple accounts, contrary to what you might be told, the IRS doesn't care which account you pull RMD out of...as long as you get 100% of the minimum out the year you inherited the account)

And for any IRA owner required to distribute the RMD each year, failing to take proper RMD's ON TIME has a big penalty! That penalty is a whopping 50% of what you should have taken out!  So again, choosing the wrong trustee or custodian in this area is not only expensive, but also a huge hassle if that money institution doesn't comply with strict IRS reporting guidelines. Or fails to notify you of important distribution options on time, before penalty situations exist. A current client case with a Metropolitan Life IRA proved their mistake in telling the beneficiary he had 5 years to pull money out (not true if over age 70.5 at the time ). That situation risked costing him 50% of his missed RMD's, since it was discovered 3 years after the death! (At the time the case was active, Met gave me an email saying nothing was reported to the IRS yet... meaning the 5 year applied without first discussing better options with the beneficiary)

In this area of work, don't assume anything! Improper training in many institutions, especially small firms, can cause disastrous results and put the money in Inherited IRA Hell automatically before you even have a chance to object. Papers can be put in front of you to sign. And, if wrong, they guarantee your money is going into the Inherited IRA Hell tax pit! Sadly,  some of our biggest goofs equally come from name brand firms, so the short list of "Inherited IRA Hell friendly" custodians remains very, very short! (Ask us and we will tell you)

In many cases, relying on the institution alone for your tax advisory is not a good policy, and they will tell you up front they can't give you legal or tax advisory. (THIS IS A POINT YOU REALLY SHOULD WRITE DOWN!)

Remember, the institution (custodian) lawyers will include disclaimers in your account agreement that inform you to get qualified legal or tax advice, if you need it. (YOU MOST LIKELY DO) In other words, they will state they aren't in that business!  Don't ignore those disclaimers!

Plenty of inherent liability exists with any institution who advertises or agrees to take over the custodianship of ANY Inherited IRA account...so, they can disclaim the liability all they want.  By their very act of receiving your funds and holding them -- they share the risk and penalty for failing to follow IRS codes, rules and general common contract law, just the same. Though every custodial account will insert "hold harmless" language, it isn't fool proof when MALPRACTICE develops.

Also, special problems may happen often on all IRA's that require RMD , which are split between two or more institutions. Multiple institutions as your money Trustees have no way to communicate to get the RMD calculations correct for you. (Privacy Act Laws apply)

Even though it doesn't matter which account you draw your RMD from each year, you or someone you trust for accounting purposes should figure the RMD for you which is always going to be based on the closing values of the prior account year. (December 31st values determine RMD) All you need is the current IRS published tables that spell out your life expectancy!  Software is also available, some for free online, that will give you these required figures.

If you engage my firm for paid professional services, I will promise to give free RMD calculations for the life of your retained account.  

I do think that the size of the trustee should be very large to assure you that they are doing plenty of Inherited IRA account business and therefore are very experienced. And, that normally means they have the best database software and compliance software as well so "stupid" mistakes don't take place. Placing your money with a small firm could expose you to less than stellar management and service practices.  Any firm may have good expertise on this subject, but give poor or slow service.  The right firm should be smart about this type of specialty account and be known for great service as well!

And, of course, I think that the firm you choose, or firms in many cases (you usually can split out and divide your Inherited IRA without taxation, in case you were wondering) should be highly rated by rating companies to assure you that your money is safe. Safety of the firm always mattered. After the financial crisis of 2008, it is paramount!

And, I think that the institution you choose should openly tailor their services to handling Inherited IRA accounts. That would constitute the minimum requirements I would look for when or if you are now shopping for a new home for your Inherited IRA account.

But, with that said, I have to tell you a story. Years ago, I went with a brokerage firm that advertised everything I just mentioned. They declared themselves the experts when this area of practice was first born around 1998 and 1999 here in the U.S.

The end result is that a con man was discovered as the head of the entire "Stretch IRA" department of the firm and was instantly fired when the parent company found out! (Guess who told them?) The company could not administer the large amount of business I placed with them to save their lives! In other words, they were fiduciary imposters! Legal remedy was sought and obtained in private settlement for clients who were hurt by their false advertising.

So, when you go shopping, be careful who you deal with today...not everyone -- IS who they say they are! (or is an "expert" just because they say they are).

TIP: When you get the exact same advice from two unrelated advisers, chances are much higher you are getting GREAT advice!



M.D. Anderson works hard for clientsSo who should you hire or consult with to avoid those simple mistakes that trigger instant taxation of your loved one's inherited IRA? Who can get it right so you don't get wronged?

Who is willing to bend over backwards to help you get what you want?

The hard part, is finding that someone special you can trust to assist you -- in time! And, hopefully, finding someone in your local area. The best starting place is to ask them if they have ever worked on large IRA cases in the past other than just doing spousal rollovers. And ask how successful they have been in helping their clients avoid needless income taxation on inherited IRAs. (Without the IRS questioning the work they did)

Or, you can hire me no matter where you live for advisory, once a small starting advisory retainer is paid. If it costs you a few hundred dollars in  consultation fees with my firm in order to help save a a few thousand or tens of thousands of dollars (more like hundreds of thousands for large IRA clients we have helped) in needless income taxes. I think you will agree it is a very good trade!

I average rescuing nearly 7.5 million a year for clients from needless instant taxation of inherited IRA funds!  (We just help you delay what the IRS/state tax agencies will eventually get) And, if you want to explore the possibilities of converting your IRA to a Roth IRA before you die, my services extends to that important option as well for consulting and tax projections of the costs and benefits.

With more and more lawyers and CPA's also building their practices to give proper large IRA consultations, especially with unknown federal estate tax issues sun setting in the future back to former rates of taxation -- you may very well find answers with your own advisers who can help you and guide you in this important process. If you need your current tax professional to learn more on this subject, send them to this site! 

But, if you feel stress on your own case or can't find proper local help, my skill is in integrating the tax information on Inherited IRAs and how it relates to your specific current or planned investment plans. With a short consultation with me, it can be assured that the best and most efficient new Inherited IRA account is the result. And of course, I will take special care and attention to assure your ALL of the money remains tax-deferred if at all possible and for as long as possible now under the new Secure Act provisions.

Or, if you like, I will help your current adviser so a professional review and action plan can be put together for you, while still working with your trusted adviser. Most are open to suggestion as they will admit it is not an area they fully practice in or understand. (They purposely leave this area of consulting up to people like me)


Inherited IRA's are like the Plinko GameI am staying away from giving you the boring specific IRS rules and regulations on Inherited IRA's for the very reason it will put you asleep, and motivate you to close your browser because you got overwhelmed with data you can't process or handle.

Just be assured if you need an Inherited IRA expert, those rules will be applied to your specific case and each case has special circumstances that require individual research anyway, before actual advisory can be given. It is not a one size fits all type of advisory business. 

Rather, it is kind of like the PLINKO game on the Price is Right television show. I start at the top and go one direction when a trust is the beneficiary of your Inherited IRA account. (There is a pretty good chance you will end up with a -0- on this one, if you don't get help from a qualified inherited IRA adviser who understand the rules for trust owned death benefits.) 

But, I go another direction if it names you specifically as a "designated beneficiary". (This is the very best route of course!) And yet another direction if you aren't, which means you have only as little as five years to remove the funds and pay your income taxes on them. And sometimes - no time left! (You are in Inherited IRA Hell, you just don't know it...)

That PLINKO chip can also split out again in different directions depending on if your deceased loved one had already taken his or her current year RMD, before departing this world. And yet another direction if a disclaimer is allowed in legal documents or intestate law in estate settlements.  

Your heirs can end up with problems, by YOUR own mistakes as account owner. Or your heirs can make mistakes right after your death by not registering the account properly. Yet, a third risk is improper management throughout the years that can also suddenly end a good thing - and cause needless taxation. For a low annual retainer, our firm can be hired to "watch" your account while you are here and then, after your demise so problem areas can be avoided, if not completely eliminated.  

Eight years ago, IRA accounts reported to us by registered guests on this site in April 2012 amounted in over 55 million dollars of mostly IRA money. This was after I was quoted in a Wall Street Journal column article and online news story. All of these people were concerned about just how well their IRA's were set up to avoid the problems we have outlined on this site. You too can "fix" problems and not leave it to chance when you pass on.  

Ultimately, you or your beneficiaries will pay one way or the other for advice or pay because of the consequences of the lack of it, when it comes to these complicated products known as Inherited IRA's.

Which way do you prefer?

M.D. Anderson Signature

 Call me Toll-Free: 1-800-782-2806 or if in the Valley (Arizona), 480-345-1616


Disclaimer: The information contained on this inherited IRA information site, though deemed reliable and accurate, is solely the opinion and statements of the adviser profiled. Therefore, it should be considered "general" in nature and no action should be taken based on this information until such time your specific situation and circumstances can be reviewed and analyzed by competent and qualified tax, insurance, legal, and/or other financial advisers. This information is not intended, nor should be construed as legal advice. FSI can not and will not give you legal advice. If you need legal advice, we can refer you if you desire and request it. Founded in 1990, FSI is a long-term Financial Advisory and Arizona domiciled Corporation now providing services nationwide and in some foreign countries. Services profiled herein are available unrestricted to Arizona residents. Residents outside of Arizona are eligible for certain consulting services and to legal (lawyer) referrals by our firm when requested of us. For Arizona residents, communication with an Arizona Certified Legal Document Preparer (AZCLDP) are private and confidential but are not "privileged", such as they would be with an actual Lawyer.

Besides being a licensed  Arizona Certified Legal Document Preparer, Mr. Anderson serves as an associate of an international law firm. He also is an Arizona Professional Accountant/Consultant and licensed IRS registered tax preparer and ERO (Electronic Return Originator) agent/firm. He also is an Arizona licensed Professional (Realtor®)/consultant) with Realty One Group and a licensed Professional insurance agent and corporation for life, health or annuity sales.  Inherited IRA accounts have many options you may not be aware of, including alternative "hard asset" type investments. Let M.D. show you the the options your current banker, broker or insurance agent may still be hiding from you!

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