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. For non-spouse beneficiaries, it’s the only legal way to change custodians: any method that puts a check in your name turns the entire balance into a taxable distribution with no do-over.¹ The mechanics are simple. The details around account titling and the current-year required minimum distribution are where people get hurt.

Why the Method Matters Before You Start

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

A 60-day rollover, where the old custodian sends the money to you and you redeposit it, is available for your own personal IRA but explicitly barred for inherited accounts held by non-spouse beneficiaries.² If a non-spouse beneficiary receives a check payable to them personally, the IRS treats the full amount as ordinary income for the year. There is no 60-day window to fix it.

Surviving spouses have more room to maneuver and can use a 60-day rollover in some situations, but even for a spouse the direct transfer is cleaner because it avoids mandatory withholding and the risk of missing the deadline.³

Step by Step: Moving the Account

Start to finish, most transfers take one to three weeks after paperwork is submitted.

Open the New Inherited IRA With the Correct Title

Contact the receiving institution and open a new inherited IRA before touching anything at the old one. The title on this account is the single most important detail in the entire process. 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.³ In practice, that reads something like “John Smith, deceased, IRA FBO Jane Smith, Beneficiary.” The exact format varies between custodians, but three elements always appear: the deceased owner’s name, an indication of death, and your name as beneficiary. If the new custodian opens the account in your name alone, the IRS will treat the incoming funds as a distribution to you personally.

Expect the new custodian to ask for the deceased owner’s name, date of birth, date of death, and your relationship to them. Have a certified copy of the death certificate on hand. Many institutions also want a recent statement from the old custodian to verify the existing account titling.

Complete the Transfer Request Form

The receiving institution provides the paperwork, usually labeled “Transfer Request,” “Direct Transfer,” or “Trustee-to-Trustee Transfer.” Fill in the old custodian’s name, the exact account number, and the account title as it currently appears at the old institution. Specify that this is a direct transfer, not a rollover. Some forms have a checkbox; others require you to write it in.

Larger transfers, and any account holding individual securities, sometimes need a Medallion Signature Guarantee. That’s a specific stamp from a bank or brokerage verifying your identity and authority to move the assets. You get it in person at a participating institution, so ask the receiving custodian up front whether it’s required.

Submit the Documents and Let the Custodians Handle It

Once you turn in the completed form, the certified death certificate, and anything else the receiving custodian requests, they take the lead. They send the transfer request to the old custodian and the two institutions coordinate the movement of assets between them. You should not need to contact the old custodian yourself, though a call to confirm the request arrived can move things along.

Monitor Both Accounts Until Assets Land

Watch the old account for the assets to leave and the new account for them to arrive. If the transfer requires liquidating investments first, it takes longer than an in-kind move of the same holdings. When the assets show up at the new custodian, confirm the account title is correct and the balance matches what you expected after any pre-transfer distributions.

Take the Current-Year RMD Before You Transfer

If a required minimum distribution is due for the current year, take it from the old account before you initiate the transfer. The RMD obligation doesn’t pause while assets are in transit.

The annual RMD is calculated using the account balance as of the prior December 31 and the appropriate IRS life expectancy table.⁴ If you move the full balance before satisfying it, the new custodian inherits the obligation but may not have the underlying data to compute it correctly, and retrieving those numbers from a closed account is a headache. Ask the old custodian to distribute the RMD first, then transfer what’s left.

Missing the December 31 deadline for an RMD triggers a 25% excise tax on the shortfall. The penalty drops to 10% if you correct the miss during 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 5329.⁵

In-Kind Transfer or Liquidation

The assets can move two ways. An in-kind transfer sends the same shares of the same funds or stocks to the new account without selling. A liquidation transfer sells everything at the old custodian and moves cash.

Inside a traditional inherited IRA, both routes are tax-neutral. Every dollar withdrawn will eventually be taxed as ordinary income regardless of how or when the underlying investments were purchased, and inherited traditional IRAs do not get a step-up in cost basis the way an inherited brokerage account or house would. The choice is about cost and timing, not taxes.

The in-kind approach avoids selling at a bad moment and avoids transaction costs from selling and repurchasing. It only works if the receiving custodian holds the same investments. Proprietary mutual funds from one brokerage often can’t be transferred in-kind to another, in which case the old custodian sells the holdings, transfers cash, and you reinvest at the new institution. That leaves you out of the market during the transition.

The Transfer Does Not Reset the 10-Year Clock

Most non-spouse beneficiaries who inherited after December 31, 2019, must empty the entire account by December 31 of the year containing the tenth anniversary of the original owner’s death.⁶ Moving custodians doesn’t reset, pause, or extend that deadline. If the owner died in 2022, the account still has to be empty by the end of 2032, no matter how many transfers happen in between.

Whether you also owe annual distributions during years one through nine depends on when the original owner died relative to their required beginning date. If the owner died on or after that date, annual distributions are required in each of the first nine years, with the balance due in year ten.⁷ If the owner died before their required beginning date, no annual distributions are required and only the year-ten deadline applies.³ When you open the new account, make sure the receiving custodian records the original owner’s date of birth and date of death. Those two dates drive the entire distribution schedule.

Surviving Spouses Have Options a Transfer Doesn’t Cover

A spouse who inherits an IRA has three choices no other beneficiary gets:³

Treat the IRA as your own by redesignating yourself as the account owner. You can then contribute, name beneficiaries, and follow the RMD rules based on your own age.
Roll the funds into an existing IRA in your name, or a new one, using either a direct transfer or a 60-day rollover.
Keep the account as an inherited IRA, which can be useful if you’re under 59½ and want to take distributions without the 10% early withdrawal penalty that applies to your own IRA.

If you keep the account as an inherited IRA and later want to change custodians, use the same trustee-to-trustee transfer process, with the account still titled in the deceased owner’s name for your benefit. If you treat the account as your own or roll it into your IRA, it becomes a standard IRA in your name and follows ordinary IRA rules.

Tax Reporting on the Transfer

A properly executed direct transfer of an inherited IRA generally does not generate a Form 1099-R. The instructions for Form 1099-R tell custodians not to report transfers between trustees that involve no payment or distribution to the participant.⁸ If a 1099-R shows up after a direct transfer, call the issuing custodian right away to confirm it was coded correctly. A miscoded 1099-R can make the transfer look like a taxable distribution to the IRS.

Any RMD you took before starting the transfer will produce its own 1099-R from the distributing custodian. That amount goes on your return as ordinary income for a traditional inherited IRA, or as a potentially tax-free qualified distribution from an inherited Roth. Keep records of both the RMD and the transfer with your tax documents for the life of the account.

Mistakes That Turn a Transfer Into a Taxable Distribution

The expensive errors happen before the assets move.

Wrong account title. If the new account is opened in your name instead of the deceased owner’s name for your benefit, the IRS treats the whole balance as distributed to you. For a non-spouse beneficiary, that can’t be undone.
A check payable to you. Even if you plan to deposit it directly, a check made out to a non-spouse beneficiary is a taxable distribution. The check must be payable to the new custodian.
Skipping the current-year RMD. Moving the entire balance first pushes the obligation to the new custodian, who may not calculate it, and a miss triggers the 25% excise tax.⁹
Mixing inherited funds with your own IRA. Non-spouse beneficiaries can’t combine inherited assets with a personal retirement account. Doing so creates a taxable distribution from the inherited account and an excess contribution to your own.²
Losing track of the original date of death. The 10-year deadline runs from that date regardless of how many custodians hold the account. If neither you nor the new custodian has it recorded, you can miss the year-ten deadline and face penalties on whatever remains.

Take the RMD first, then let the receiving custodian drive the paperwork on the direct transfer. Confirm the new account title in writing before any assets move, and keep the death certificate and the original owner’s date-of-death information filed with your tax records for as long as the account exists.

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