Income in respect of decedent
I need some help. I have a client who died in July before taking her RMD for 2008. The custodian of the funds says that the beneficiaries will take the RMD and pay income tax on it. My CPA seems to think it is paid to the estate and filed on her 2008 tax return as IRD. Anyone know the code that can be shown to the custodian???
Thanks,
Scott
Permalink Submitted by Alan Spross on Tue, 2008-11-25 20:36
Scott,
I don’t think the custodian needs the IRS Reg – your CPA does. The following is copied from the IRS Regs 1.401a(9)(5) See final sentence:
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Q–4. For required minimum distributions during an employee’s lifetime, what is the applicable distribution period?
A–4. (a) General rule. Except as provided in paragraph (b) of this A–4, the applicable distribution period for required minimum distributions for distribution calendar years up to and including the distribution calendar year that includes the employee’s date of death is determined using the Uniform Lifetime Table in A–2 of §1.401(a)(9)-9 for the employee’s age as of the employee’s birthday in the relevant distribution calendar year. If an employee dies on or after the required beginning date, the distribution period applicable for calculating the amount that must be distributed during the distribution calendar year that includes the employee’s death is determined as if the employee had lived throughout that year. Thus, a minimum required distribution, determined as if the employee had lived throughout that year, is required for the year of the employee’s death and that amount must be distributed to a beneficiary to the extent it has not already been distributed to the employee
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But, it would still be advisable to attach a statement to decedent’s final return explaining that the RMD was taken by the beneficiaries showing their name and SSNs.