RMD Question
Have situation in which the ‘IRA Holder/Participant’ passed away prior to their 70 1/2 birthday …
There were 3 beneficiaries listed (33.33% each) … The beneficiaries were listed as ‘Relatives’, not a spouse or children … These beneficiaries because of logistics, did not come after the monies right away, as it took some time to locate and establish ‘Beneficiary IRA’ accounts … Being the fact the the original ‘IRA Holder/Participant’ passed away prior to the RMD date, is there any rule that states that the 1st years RMD must be satisfied ?? (Now the ‘IRA Holder/Participate’ would be past the 70 1/2 threshold – But wasn’t at the time of death)
Permalink Submitted by Alan Spross on Tue, 2011-07-05 20:46
The key date is the required beginning date, and that is obviously AFTER the date of death in this case. Therefore, there is no RMD required for the decedent or based on the age of the decedent.
The first beneficiary RMD is due no later than 12/31 of the year following the year of the IRA owner’s death. That is also the deadline for establishing separate accounts that permit each beneficiary to use their own life expectancy for RMDs. After that date, separate accounts can still be established, but each beneficiary will be stuck using the life expectancy of the oldest of the 3 beneficiaries. If the deadline for the first beneficiary RMD also passed, they can still use life expectancy distributions, but need to make up missed RMDs and pay the penalty on the missed RMDs. A beneficiary can also use the 5 year rule if they wish to.
In determining any missed RMDs, remember that 2009 RMDs were waived.
Permalink Submitted by Gregg Guiol on Tue, 2011-07-05 21:12
As always – THANK YOU !!! for the detailed reponse …
Gregg Guiol