Beneficiary Self-Directed Realestate IRA question

[Travis Christman]

Hello,

I'm brand new here, and I have a question that I can't seem to find the answer for due to its unique situation. 

I'm now the owner of a Beneficiary Self-Directed Realestate IRA. The IRA contains one rental property and cash.

Per IRS rules I am not allowed to put money into the beneficiary IRA. I do receive rent money for the property via check, into a separate checking account not tied to the IRA. My question is what do I do with the rent money? Do I still place it back in the beneficiary IRA(which I don't think I can do)? Do I place it in a new IRA? Pocket it?

:  Inherited from someone other than spouse.

If you inherit a traditional IRA from anyone other than your deceased spouse, you can't treat the inherited IRA as your own. This means that you can't make any contributions to the IRA.

Since it is a beneficiary IRA, I will have to take out a minimum distribution per IRA rules as a non spousal IRA beneficiary by the end of the year 2018. Eventually the distributions will exhaust the cash, then it gets even more complicated, especially if I'm unable to put rental income back into the IRA.

[Dmitriy Fomichenko]

Travis, welcome to BP and congrats on the first forum post!

The rent from the property owned by the IRA must go back into the IRA. You are not allowed to take the rent and deposit that into your personal checking account. There must be a custodian who holds the property title, the rent should be issued to the custodian and they are responsible for crediting your inherited IRA account. Then you take the distribution from the custodial account.

You must plan for RMD, depending on how much cash you have left, the amount of RMD and the net income (rent minus expenses) you may run out of cash. You don't want to be in a situation one day when there is zero or negative balance in your IRA. Possible solutions might be selling the property, bringing on a partner (selling portion of the property), or taking in-kind distribution of a portion of entire property.