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... The manager of the bank is telling me that I need to roll the funds into 3 IRAs, one in each beneficiary's name, as we can assume the IRA proceeds as our own. No other options have come to mind, as far as he is concerned. (I do realize that the bank is looking to preserve any deposits they can.)..

It sounds like they are being straight with you as to what is best.

Once the IRA is split into three inherited IRA then each of the three new owners can have their inherited IRA transferred wherever they want(like Fidelity or Vanguard or whoever). There may be a small transfer fee of about 50 to 75 dollars but this is normal.

Once the IRA is split, then each year the value on January 1st will be used to calculate the required minimum distribution. Most IRA companies will be able to set this up to be done automatically so that you don’t forget and they will calculate how much needs to be transferred. It is convenient to have a taxable account with the same company so the money can just automatically be transferred into the taxable account each year. If you don’t do the required distribution the taxes and penalties are punitively high, you do not want to miss a required distribution.

The distributions from the inherited IRA will be taxable income and if it is a large amount then it would be a good idea to file estimated taxes so that there is not a penalty for not withholding enough. If the person is eligible for an IRA or a 401K, then they can make an equivalent contribution to the IRA or 401K to get a tax deduction to cancel out the distribution so they wouldn’t have to pay more taxes.

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