Bene IRA when IRA holder hadn’t taken all of the RMD
I had a client that died in July at age 80. She named her 4 kids as beneficiaries. She was still needing to take an additional 10,000 from her IRA at her death. My understanding is that the beneficiaries have to take the distribution for her from their bene IRA’s. Do they all have to take at least 2500 this year and who is responsible for the tax liability? The individual beneficiaries or the estate?
Permalink Submitted by Alan Spross on Thu, 2008-08-28 22:30
It sounds like separate accounts have already been created. If so, the 10,000 can be split however the beneficiaries choose, but if no one wants to take more than 2500, then they will all need to take that same amount. The distribution will be taxable to each beneficiary at their marginal tax rate, not to the estate.
If separate accounts have not been created, the 10,000 can be distributed in combination to the beneficiaries, but then the IRA custodian has an accounting job to be sure that the size of each separate account is adjusted accordingly to how much went to each beneficiary.
Of course, they should check to see if there was any tax basis left in the inherited IRA as that would make their distributions partially tax free.