How to calculate RMDs for Bene IRAs

Submitted by Dennis Prout on Tue, 2013-12-03 19:39

The original IRA owner passed away in September 2012 at age 86, with four equal non-spouse beneficiaries. The IRA was not split into separate beneficiary IRA accounts until April 2013. Do we simply divide the 12/31/2012 IRA value by 4 to get a dollar amount for each beneficiaries share of the IRA, and use that as the year end value for calculating RMDs from the beneficiary IRAs for 2013?

Thanks!



Submitted by Alan - IRA critic on Tue, 2013-12-03 21:33

  • Yes, exactly. The date of establishing the separate inherited IRA accounts is not a factor, as each of their shares of the 12/31/12 balance was 25% and that amount is used for their 2013 RMDs. If their was any basis in the IRA (Form 8606), each beneficiary inherits 25% of that also.
  • The beneficiaries also need to be sure that the year of death RMD was completed. If not, it needs to be completed ASAP and can be taken in any combination by the 4 beneficiaries and a 5329 should be filed to request a  penalty waiver that will almost certainly be granted.

Submitted by Dennis Prout on Wed, 2013-12-04 15:03

Great.  Thank You!

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