Self Directed IRA - Owned by Traditional & Inherited IRA -

3 Replies

Hi Everyone;

4 years ago, I created a self directed IRA through NAFEP (National Association of Financial Estate Planners) and AE&T (American Estate and Trust, acting as IRA custodian). I transferred both a traditional IRA of mine, and an inherited IRA that I was beneficiary to, to AE&T. Each IRA has their own account with AE&T, each account then invested in a newly formed LLC in Illinois. I'm the manager of the LLC and have checkbook control of most of the funds in these accounts. The LLC invested in a 5-family and has performed well for me over the past few years. The LLC also has plenty of cash, and I'm thinking about investing 2/3 of the available cash in another multi-family investment. The inherited IRA has been making RMD (Required minimum distributions) withdrawals from the inherited IRA account for the last three years. I Intend to continue to stretch this inherited IRA over my lifetime. A few years ago I was also doing some estate planning and sent revised beneficiary designations to the IRA custodian for each IRA account. The traditional IRA is designated to go to my wife, and they confirmed her as beneficiary of that account, however they would not accept a beneficiary designation for the inherited IRA account, and like they always do, they encouraged me to speak to my legal counsel. I don't use lawyers unless I absolutely need to. I'm quite confident that the funds will end up with my wife, but I suspect the account may have to lose its tax deferred status, pay the taxes due on the inherited account before the funds are received by my wife. Could anyone in the bigger pockets community explain to me what happens to inherited IRA that is streched over ones lifetime, when that individual passes away.

Thanks for your help

@John Symington  You are the manager and have checkbook control? You need to be careful you are not self dealing or you wont have to worry because the IRS might own it all. You need to check with one of the SDIRA guys on here, and maybe not in a public forum, just saying. 

Hi Jeremy;

Where do the SDIRA guys hang out on the bigger pockets website ? I kind of new to bigger pockets and am not that familiar with the different areas. Any help or direction would be appreciated.


@John Symington  

I can confirm that a new beneficiary can takeover an existing beneficiary IRA but I'm having to do more research to determine the specific RMD requirements. I suspect that the original beneficiary RMD calculations are assumed from the first beneficiary but I don't want to say that with total certainty until I do additional research. If you have more specific questions, I invite them.

By the way, welcome to BP!

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