How to Do a Trustee-to-Trustee Inherited IRA Transfer

A trustee to trustee inherited IRA transfer moves the account directly from the old custodian to a new one without the money ever passing through your hands, and for a non-spouse beneficiary it is the only safe way to change institutions. Any method that routes a check to you personally is treated by the IRS as a full taxable distribution of the inherited account, and there is no 60-day fix.¹ The mechanics are not complicated. The details around account titling, the current-year required minimum distribution, and the 10-year deadline are where people lose money.

Why a Direct Transfer Is the Only Option

Federal tax law treats a direct trustee-to-trustee movement as a non-event. The relinquishing custodian sends the assets straight to the receiving custodian, you never have control of the funds, and the inherited IRA keeps its tax-deferred status and its existing distribution timeline.

A 60-day indirect rollover works the other way. The old custodian pays the money to you, and you have 60 days to redeposit it into a qualifying account. That option exists for your own personal IRA. Federal law bars it for inherited IRAs held by non-spouse beneficiaries.¹ If a non-spouse beneficiary receives a check made out personally, the full balance is added to ordinary income for the year, and the mistake cannot be undone.

Title the New Account Correctly Before Anything Moves

The first step at the receiving institution is opening a new inherited IRA, and the account title is the single detail most likely to turn a routine transfer into a tax disaster. IRS Publication 590-B requires the account to be “set up and maintained in the name of the deceased IRA owner for the benefit of” you as beneficiary.² In practice the title reads something like “John Smith, deceased, IRA FBO Jane Smith, Beneficiary.” Exact wording varies by custodian, but the three required elements do not: the deceased owner’s name, an indication of death, and your name as beneficiary. If the new custodian titles the account in your name alone, the IRS treats the balance as distributed to you.

The custodian will ask for the original owner’s full name, date of birth, and date of death, plus your relationship to them. Have a certified copy of the death certificate ready. Some institutions also want a recent statement from the old custodian so they can match the existing titling.

Give the new custodian the original owner’s date of birth and date of death in writing and keep a copy for yourself. Those two dates control your entire distribution schedule, and if a later custodian ever has to reconstruct them, it is painful.

The Transfer, Step by Step

Once the new account exists, the receiving custodian runs the transfer. Your job is mostly paperwork and verification. Expect one to three weeks from submission to completion.

Request the Transfer Through the New Custodian

Ask the receiving institution for its transfer paperwork. Depending on the firm, the form is labeled “Transfer Request,” “Direct Transfer,” or “Trustee-to-Trustee Transfer.” Enter the old custodian’s name, the exact account number, and the account title as it appears on the existing inherited IRA. Specify that this is a direct transfer rather than a rollover. Some forms have a checkbox; others require you to write it in.

Larger balances and accounts holding individual securities often need a Medallion Signature Guarantee, a special stamp from a participating bank or brokerage that verifies your identity and authority to move the assets. You have to appear in person to get one, so ask the receiving custodian early whether they will require it.

Submit the Form and Supporting Documents

Hand in the completed form with a certified death certificate and anything else the custodian asks for. The receiving institution then contacts the old custodian directly, and the two firms coordinate the movement of assets. You should not need to contact the old custodian yourself, though a call to confirm they received the request can shorten the timeline.

Verify Both Accounts

Watch the old account for the assets to leave and the new account for them to arrive. In-kind transfers of the same holdings tend to settle faster than transfers that require liquidation. Once the assets land, check the title of the new account against the required format and confirm the balance matches what you expected after any pre-transfer distributions.

Take This Year’s RMD Before You Transfer

If a required minimum distribution is owed for the current year, take it from the old account before starting the transfer. The RMD obligation does not pause while assets are in transit.

The RMD is calculated using the account balance as of the prior December 31 and the appropriate IRS life expectancy table.³ If you move the entire balance before satisfying it, the new custodian inherits the obligation but often lacks the data to calculate the right number, and extracting that information from a closed account at the old custodian is slow. The simpler path is to have the old custodian pay out the RMD first, then transfer what remains.

Missing the December 31 RMD deadline triggers a 25% excise tax on the shortfall. The penalty drops to 10% if you correct the mistake within the correction window, which generally runs through the end of the second tax year after the year the penalty was imposed. The correction is reported on IRS Form 5329.⁴

In-Kind or Liquidation

The transfer form asks how the assets should move. An in-kind transfer sends the actual holdings over; the same shares of the same funds or stocks land in the new account without being sold. A liquidation transfer sells everything first and moves cash.

For a traditional inherited IRA, both are tax-neutral. The assets have never been taxed inside the account, every dollar withdrawn later is ordinary income regardless, and inherited traditional IRAs do not receive a step-up in cost basis the way inherited brokerage accounts or real estate do. The choice is practical, not tax-driven.

In-kind avoids selling at a bad moment and any transaction fees tied to selling and rebuying. It only works, however, if the receiving custodian supports the same investments. Proprietary mutual funds from one brokerage frequently cannot transfer in-kind to another. In that case, the old custodian liquidates, transfers cash, and you reinvest at the new institution, which puts you out of the market during the transition.

A Transfer Does Not Reset the 10-Year Clock

Most non-spouse beneficiaries who inherited an IRA after December 31, 2019, must empty the account by December 31 of the year containing the tenth anniversary of the original owner’s death.⁵ If the owner died in 2022, every dollar must be out by the end of 2032. Moving the account between custodians does not reset, extend, or pause that deadline. The clock keeps running regardless of how many transfers happen in between.

Whether annual distributions are also required in years one through nine depends on whether the original owner had reached their required beginning date before death.⁶ When you set up the new account, make sure the custodian codes your distribution schedule based on the original owner’s dates, not on default assumptions.

Inherited Roth IRAs follow the same transfer mechanics and the same 10-year outer deadline for non-spouse beneficiaries, with no annual RMDs required during years one through nine because Roth owners have no required beginning date during life.²

Surviving Spouses Have Other Options

If you inherited from your husband or wife, a trustee-to-trustee transfer that keeps the account titled as an inherited IRA is one choice, not the only one. A spouse can also treat the IRA as their own or roll it into their own IRA, both of which convert the account to a standard IRA in the surviving spouse’s name under normal IRA rules.² Keeping it as an inherited IRA often makes sense for a surviving spouse under 59½ who wants to take distributions without the 10% early withdrawal penalty. If you choose to keep the inherited titling and later want to change custodians, use the same trustee-to-trustee process described above.

What to Expect on Your Tax Forms

A properly executed trustee-to-trustee transfer of an inherited IRA generally does not generate a Form 1099-R. IRS instructions direct custodians not to report transfers between trustees that involve no payment or distribution to the participant.⁷ If a 1099-R shows up after a direct transfer, call the issuing custodian and verify the coding. An incorrectly coded form can make the IRS believe you took a taxable distribution.

Any RMD you took before initiating the transfer will produce a separate 1099-R from the distributing custodian. That amount goes on your return as ordinary income for a traditional inherited IRA, or as potentially tax-free income for a qualified Roth distribution. Keep records of both the RMD and the transfer in case the IRS asks.

Mistakes That Turn a Transfer Into a Tax Bill

The expensive errors tend to happen before any assets actually move:

Opening the new account in your own name instead of in the deceased owner’s name for your benefit. For a non-spouse beneficiary, the IRS treats the whole balance as distributed, and the result is irreversible.
Requesting a check payable to you. Even if you plan to deposit it into a new inherited IRA, a check made out to a non-spouse beneficiary is a taxable distribution. The check must be payable to the new custodian.
Transferring the full balance without taking the current-year RMD first, which leaves the obligation hanging and risks the 25% excise tax.⁸
Depositing inherited IRA funds into your own personal IRA. Non-spouse beneficiaries cannot combine the two. The move produces a taxable distribution from the inherited account plus an excess contribution to the personal one.¹
Losing track of the original owner’s date of death. A later custodian who doesn’t have it may miscalculate your 10-year deadline, and the penalties fall on you, not on them.

The safe sequence is short. Take any current-year RMD first. Open the new account with the required inherited-IRA titling and confirm the exact wording in writing. Let the receiving custodian request the assets directly from the old one. Keep the death certificate and the owner’s date-of-death records with your tax papers for the life of the account.

1
Office of the Law Revision Counsel. 26 USC 408 – Individual Retirement Accounts – Section 408(d)(3)(C)
2
Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements
3
Internal Revenue Service. Required Minimum Distributions for IRA Beneficiaries
4
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans – Section 4974(e)
5
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans – Section 401(a)(9)(H)
6
Internal Revenue Service. Notice 2024-35, Certain Required Minimum Distributions for 2024
7
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
8
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans