Inherited IRAs Pre/Post Owners 70 1/2
1. Client passed away December 2011, was over the age of 70 1/2 and had already taken her 2011 RMD. Her children (son and daughter) were listed as beneficiaries. They need to take RMDs based on their respective halves December 31, 2011 value and their life expectancy by December 31, 2012. Is this correct?
2. Client passed away April 2012, was under the age of 70 1/2. Her children (2 sons) were listed as beneficiaries. They need to take RMDs based on their respective halves December 31, 2012 value and their life expectany by December 31, 2013, they are not required to take a distribution in the year of her death. Correct?
Thanks.
Permalink Submitted by Alan Spross on Wed, 2012-08-01 19:38
1) Yes, correct as long as the beneficiaries create separate inherited IRAs for themselves before 12/31/2012. They use their age attained by end of 2012. Without separate accounts they must both use the age of the oldest beneficiary.
2) Correct. Separate accounts created same as above no later than 12/31/2013. No RMD due for 2012.
Since client passed prior to RBD, the beneficiaries each have the option to elect the 5 year rule. Under that rule there would be no RMD required until end of 2017 but entire share would have to be distributed by the end of 2017. This normally would not be advisable except in certain situations.