RMD puzzle
Dad passed in November, 2007. He did some “interesting” things with his IRA accounts.
Acct A was opened in 2006. The only distribution for it in 2007 (unless I find out otherwise) was a complete disbursement, which was then rolled over into Acct B at another firm. Acct B did not have a 2007 RMD, I’m told, because there was no acct. balance as of 12/31/2006.
But Acct A did, and I can find out what the RMD for 2007 on it would have been.
Acct A is now closed. Acct B has now been retitled as an Inherited IRA, and it has Dad’s Trust (qualified look-through) as the bene.
Assuming Acct A DID have a 2007 RMD that wasn’t taken, must I now take it from Acct B, and if so, where does it get distributed to, taxed to and how reported on his final return? I won’t be making distributions out of Acct B to the Trust benes until late in 2008, but I want to be sure I’ve “cleaned up” after Dad’s 2007 RMD’s.
Was Dad clever 😉 or careless? 😯
Permalink Submitted by Alan Spross on Thu, 2008-02-14 05:31
The rollover does not change the RMD requirement even if the rollover was outstanding, ie not in any account on 12/31/06, and must now be satisfied from Acct B. Since it was not satisfied for 2007, it must be distributed to the trust beneficiary ASAP. It would be taxable to the EIN of the trust, but depending on the terms of the trust, it might be passed through to the beneficiaries on a K1 as income taxable to the beneficiaries.
A 5329 should be attached to his final return with a request to excuse the penalty for failure to take the RMD by year end. The IRS will likely excuse the penalty with evidence that the trust took the required RMD when the error was discovered.