I inherited an IRA that was passed down two different times; do I qualify for a 5-year disbursement?

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When a traditional IRA owner dies after age 70.5 and after she has started taking her RMDs, the owner's own minimum distribution must still be taken during the year that death occurs. So yes, you will need to take her RMD before the end of the year of her death if your Grandma did not take her RMD that year. Otherwise there will be a 50% penalty tax imposed on the amount of the RMD in addition to income tax on the distribution actually taken.

Distributions must then begin by December 31st after the year the IRA owner died. You as the new beneficiary on that twice-inherited IRA must continue the schedule of RMDs that your Grandma was using, that is, no recalculation for your life expectancy.  You must continue the RMD schedule of your Grandma which includes the 1.0 annual reduction.

Be sure to check with the IRA custodial as there can be varying rules.

December 2017
December 2017