If you are among multiple heirs inheriting an IRA, you’ll gain flexibility and perhaps tax advantage by dividing the accounts. That is, if you and your brother John are equal co-beneficiaries of a $500,000 IRA, you both can have $250,000 IRAs. In order to separate an inherited IRA:
Contact each IRA custodian. Call every bank, brokerage firm, mutual fund company, etc., holding IRA funds. Ask for the name of the person to contact regarding the division of IRA accounts.
Write to the appropriate party. If you wish, you can have your attorney or another professional draft a memo. Spell out your desire to divide an inherited IRA among the beneficiaries.
Keep following up. Don’t relax your efforts until you receive IRA statements indicating that separate shares have been created.
Whether or not you separate accounts, it’s vital to keep the IRA in the deceased IRA owner’s name. If a non-spouse retitles an inherited IRA to his or her own name, distributions will be accelerated and tax-deferred buildup opportunities will be lost.
