Inherited stock from IRA

[ej401]

Siblings John and Jane, in their early 40's,  inherited stock from mother's IRA. Mother was already taking MRD's.  What is the most tax-effective way for John and Jane to handle the funds?
Thank you!

[mwcpa]

www.irs.gov/publications/p590/ch01.html#en_US_2013_publink10002908

"Owner Died On or After Required Beginning Date


If the owner died on or after his or her required beginning date (defined earlier), and you are the designated beneficiary, you must base required minimum distributions for years after the year of the owner's death on the longer of:


•Your single life expectancy shown on Table I in Appendix C as determined under Beneficiary an individual , later, or


•The owner's life expectancy as determined under Death on or after required beginning date , under Beneficiary not an individual, later. "

[TheOtherMe]

I'm thinking I will be better off on the IRA I will be inheriting from my father *unless he lives to a 100" using my life expectancy rather than his.  

[ej401]

Thank you very much MW!

www.irs.gov/publications/p590/ch01.html#en_US_2013_publink10002908

“Beneficiary an individual. If the beneficiary is an individual, to figure the required minimum distribution for 2014, divide the account balance at the end of 2013 by the appropriate life expectancy from Table I (Single Life Expectancy) in Appendix C.”

IRA owner died after required beginning date for distribution. So if beneficiary is 45 years old and account balance is $100,000 - RMD for 2014 would be $100,000 divided by 38.8. Is this correct?

By the way, can the inherited IRA be rolled over to beneficiary’s own IRA? Or a separate inherited IRA has to be created? If so, how should it be titled?

[mwcpa]

"By the way, can the inherited IRA be rolled over to beneficiary’s own IRA?"

NO, that is something only a spouse can do

" Or a separate inherited IRA has to be created? If so, how should it be titled?"

You would set up an "inherited IRA" at you local bank, investment house, etc, but the new account does not change the rules for distribution which are based on the life of the beneficiary (who is not the spouse) or individual who passed away in your case of a person who passed away and was already taking RMDs

[TheOtherMe]

This is good for me to know also.  DS and I will inherit dad's IRA.  Do we each set up an "inherited IRA"?