Author Topic: Inherited IRA logistics--Fidelity  (Read 1738 times)


  • Bristles
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Inherited IRA logistics--Fidelity
« on: November 17, 2018, 03:32:14 PM »
I was wondering if anyone would recommend the online process over the paper process for Fidelity inherited IRA. I have some trepidation about doing this myself. But the guy I spoke to online said they can't just do it over the phone and there is no local office where I live.

I started the process and did already setup an inherited IRA that is titled BDA. Are there any pitfalls I should be aware of specifically with setting it up?

I am aware of the RMD rules and unfortunately since my Dad just passed away i have a lot to figure out before 12-31-18. I don't think he did all his RMD's this year.

Anyways, was just wondering if anyone had worked with fidelity before. I have heard good things but so far not impressed. Hold time for the inherited team was almost 50 minutes...and not open on the weekends so basically I have to take off work to get anything done with it. Not easy to do. I could do the paper process but I am leaving the country for two weeks and with the RMD deadline the sooner I get this setup for my siblings and I the better.

Also...that's the other things--I am assuming I can only set this up for myself right? The guy on the phone spoke like I could set it up for everyone but I don't get how I could do that.

Just to be clear there is about $100k split 3 ways. It is divided amongst TIRA, Roth, and a small brokerage account.


  • Walrus Stache
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Re: Inherited IRA logistics--Fidelity
« Reply #1 on: November 18, 2018, 12:10:51 PM »
Condolences on your loss.

If Fidelity isn't giving you the customer service you need, I have had excellent service (and no cost) at Merrill Edge. It also gets me higher payout on my Bank of America reward credit cards.

You can also get up to $900 for transferring to Merrill Edge:

On the inherited IRA, my understanding is that you have three options:

1) Withdraw everything within 5 years.
2) Take RMD's annually based on your father's age
3) Take RMD's annually based on your age.

Most Mustachians would prefer Option 3, as it stretches out the payout. If you don't start Option 2 or Option 3 this year, you are forced into Option 1.

Personally, I would call Merrill Edge and initiate a rollover (50 minutes hold at Fidelity is unacceptable - I've called them several times and haven't ever had to wait even a minute), confirm that the understanding above is accurate - and if so take a distribution for 2018 based on Option 3.

Note: I'm not a tax expert, this is not advice. Just another interested Mustachian hoping to point you in the right direction.


  • Walrus Stache
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Re: Inherited IRA logistics--Fidelity
« Reply #2 on: November 18, 2018, 12:42:53 PM »
@Frankies Girl dealt with this a few years back if I remember correctly.


  • Walrus Stache
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Re: Inherited IRA logistics--Fidelity
« Reply #3 on: November 18, 2018, 02:47:36 PM »
My condolences.

My understanding is that you need to complete your Dad's RMD for this year.  Since you are short on time, I would focus on getting that done as the first priority.  You probably can just have Fidelity do the RMD from his traditional IRA into his taxable account for now.

Transferring the assets elsewhere could take up time and cause difficulties getting the RMD done for this year, so I would wait on that until the RMD is done.

You can start your RMDs based on your (and your siblings') life expectancies; these will start in 2019.  Note that there are deadlines to be able to do this:  you must have the IRAs distributed into your beneficiary IRAs by 9/30/2019.  I have not heard of TomTX's second option before; I believe the only actual options are 1 and 3, and 3 is usually recommended because you'll likely end up with lower taxes that way.

The main thing to be sure of (besides the deadline) is to make sure that your beneficiary IRAs are titled properly.  Fidelity or Vanguard or Merrill or any of the big IRA custodians should be able to do that for you correctly.

You'll have to set up RMDs on your beneficiary traditional IRA and your beneficiary Roth IRA.  The RMD from the traditional IRA will be treated as unearned ordinary income.  The RMD from the Roth IRA will be tax-free income.

The person who should be taking care of your Dad's estate is the executor, who is the person he appointed in his will, if he had one.  If he didn't have one, I believe you would have to go to court to be appointed as his executor.  Fidelity may be willing to work with you since you're a beneficiary, but I'd be surprised if they did - if they know your Dad passed away they really should only be talking to the executor after receiving a certified copy of the death certificate.  The executor should be able to ask Fidelity to disburse the funds according to the beneficiary designations on the accounts (if your father set them up) or according to the will if your father had one or according to state intestacy laws if he did not.

Vanguard treated us well and made the process easy when my Mom passed away.

Hope that helps.

Frankies Girl

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Re: Inherited IRA logistics--Fidelity
« Reply #4 on: November 18, 2018, 03:47:52 PM »
Saw the batsignal.

Okay first, escalate to a rep that understands inherited IRAs ASAP. If you're just calling in to the 800 number and your dad didn't have an assigned rep, then make sure to get to someone on the line - and their name and a dedicated number to contact them directly - so you have a point person to get this stuff taken care of ASAP for you and the other beneficiaries before the end of the year. They should not be bouncing you around to whomever answers the call at this point since it is vital to get the RMD thing figured out in less than 2 months.

You need to specifically tell them "I'm worried about this account and really need to get a dedicated representative that is experienced and knowledgeable with dealing with inherited accounts. Please transfer me to such a rep that will be able to be the point person for the heirs of this account so we can make sure there are no issues or errors with the transfer and required distributions."

So get the person to confirm that the RMD is taken or not, and if it needs to be done, then have them do so. They can cut a check to the estate/beneficiaries (clarify who should receive at this point), or you can have the money shifted to a taxable account (if one exists), or ask them for any other options.

I personally did not have to deal with this part as my father had fortunately taken his RMD for the year already (which was great because he passed in December so it was pretty short notice to deal with all that and his actual death).

If you and other siblings were named beneficiaries on the account then wrapping it up will have nothing to do with any will/executor. This is actually the best/streamlined way to pass an account over the heirs. Yes, you each will need to take care of your own accounts.

This is how the rep I had explained the process:

First, we each had to create our own accounts, inherited IRA/BDA with our father's name specified in the account name (they will explain this, but it is vital that the account type is named/correct as far as it being an inherited IRA).

Next, whomever has a copy of the certified death certificate will need to send that in to them (mailing is fine - make sure to send with tracking to ensure delivery). Along with the death certificate, they will need to send a letter stating that they are one of the named beneficiaries for the account of DECEASED NAME (include his existing account number), and you are asking them to split their portion of the inherited IRA into your newly created account inherited IRA (provide account number of new iIRA account) for yourself and NAMED SIBLINGS/CONTACT INFO. I can't remember at that time if any funds held in the primary account had to be sold off before transfer, but we asked that it all transfer over "in kind" where possible and sell off anything that was a proprietary fund (if you dad had their professional management group, there are some funds you can't hold without also enrolling in professional management/advisory accounts). The rep should advise you on exact wording, but it was not complicated at all.

My sibling had access to the death certificates, so they sent it in and I only had to mail in my letter of instruction just referenced that "death certificate was provided by SIBLING NAME/CONTACT INFO, mailed on or around x date" and the rep easily located it and linked up so we didn't have to send multiple certificates.

Finally, make sure that everyone sets up automatic distributions (the RMDs) for their accounts so there is not surprises a year or 10 down the road when they suddenly realized they should have been taking them all this time. You can do this part online pretty easily too, but if you or any sibling is uncomfortable, again utilize the point person rep to have them walk you through it on the phone. They should be able to do so (mine did).

You don't have to do this right now, but one thing to also do in the next 6-ish months: you all get stepped up basis on any holdings in your father's accounts. So even if he had major capital gains on his funds in his portfolio which would mean lots of $$ owed tax-wise depending on the taxable brackets he sold off any funds while still alive, with his death the cost basis is reset to zero. So you can (and probably should) sell off everything as soon as you all figure out what you yourselves would like to hold in your portfolios (unless he had exactly the sort of mix you're happy with).

Cost basis isn't going to go nuts in~6 months while y'all mourn and then do a bit of research on the types of investments that works for you and make your moves once you're through the worst of this. But get your dad's RMD figured out, then get the accounts separated, distributed and RMDs in place and take a breather if you need it.

And finally, I am so sorry for your loss. It is so overwhelming trying to deal with the intricacies of money and investments at the same time as dealing with losing a loved one and also worry over all the things one has to deal with when there are multiple family members trying to deal with this loss as well. Take care of yourself, and do seek help at any time things seem difficult and never feel bad about needing to take a bit of time on this.

ETA: fixed deceased RMD distribution info as I wasn't sure who should get (so basically reminder to go over details with authority on subject to confirm actions to be taken)
« Last Edit: November 20, 2018, 12:31:55 AM by Frankies Girl »


  • Bristles
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Re: Inherited IRA logistics--Fidelity
« Reply #5 on: November 20, 2018, 12:26:41 AM »
Thanks everyone. Well I talked to the specialist again today and he initiated the fund transfer. I was a little worried because I had heard so much about titling these wrong. He assured me that since it has "BDA" on it it will be clear the type of IRA. Although it doesn't have my father's name on the IRA title, he said that tax documents would. I re-clarified this several times to be sure. It seems that when it comes to tax time it should be clear that this is a beneficiary designated IRA from so-and-so.

The RMD thing is a bit tricky. I am surprised there aren't better mechanisms in place for beneficiaries. I saw one poster say that I should immediately request the RMD goto his estate. Not sure that's appropriate as he has passed so RMD's goto beneficiaries(not his estate). The difference there is IRA designated beneficiaries are non-probate and therefore don't follow rules of probate. Someone could be a beneficiary of this IRA and yet not be in the will for example. Again I clarified this with the specialist. The tricky thing is someone has to take the rest of the RMD. It's only like $800. I would rather not take it but I have a job where tax mistakes are a big problem. And...there is really no way to force my siblings to or even monitor whether they did it or not. We are all getting along but since my job is on the line, I am pretty nitpicky about knowing that these things are done right.

In summary even though it's not the mustachian way I am thinking I will just take the totality of the RMD hit which again is only about $800 so really not that bad. I have maxed out pre-retirement savings of about $55k to maybe even $60k so my tax rate is actually pretty low below 10% effectively.

Stepped up basis on brokerage: My specialist also told me that they would take care of this so that the day it's transferred the new basis would be established.

SO I think I am comfortable that things are in motion. There is a Traditional, Roth, and brokerage all probably worth $25k to $35k. I say this because Dad was invested in single stocks. He basically invested the money in Berkshire Hathaway, and then doubled down by taking single stock positions in some of Buffett's picks like Apple, US Bank, Google, Ali Baba, etc. He never said that but that's what I imagine.

So obviously these aren't incredibly mustachian investment choices.....but I gotta say it's hard to sell them. I know the argument of "Would you buy them now?" and the answer is no....except now that I have them I keep thinking...."Well it's warren buffet..." or "it's google..."

It is about 10% of my portfolio(once it's transferred) so it could be argued that it's more than play money. I would prefer to keep my play money under 5%. That being said I will be shaving a little off each year with RMD's....

Any advice appreciated. I guess it's all just psychology right now.


  • Walrus Stache
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Re: Inherited IRA logistics--Fidelity
« Reply #6 on: November 20, 2018, 06:35:09 AM »
Either in the IRA or in the stepped-up taxable account - there's not any real reason to keep the investments the way they are.

The investment choices should be whatever your IPS says they should be. Is your plan to do individual stock picking? Or is it broad-based, low cost index funds like most of us?