Inherited Traditional IRA RMD

Submitted by Steve Conkin on Wed, 2013-12-04 15:33

Owner aged 79 passed away in 2013 and no RMD has yet been taken for the year. There are 6 equal beneficiaries. Will the 2013 RMD be satisfied by one of the beneficiaries cashing out their portion or will all 6 benes need to take out 1/6th of the 2013 RMD? Also, is this problematic in that the RMDs will be coming out post rollover to their inherited IRAs (but prior to 12/31/2013) instead of the RMD coming out of the original owner’s IRA? In other words the withdrawal will be reported under the beneficiaries 1099 instead of the original owner’s 1099. The current IRA custodian will only release this year’s RMD if they receive a letter of instruction from all 6 beneficiaries and I doubt that will be possible in the next three weeks.



Submitted by Alan - IRA critic on Wed, 2013-12-04 16:04

  • The year of death RMD can be completed in any combination between the beneficiaries. A cash out by one beneficiary should be more than the total unsatisfied RMD and allow the other beneficiaries to avoid taking a distribution this year. This RMD can be taken from the original inherited IRA or from any of the separate inherited IRAs established as separate accounts. All post death distributions are reported to the recipient, never to the decedent or his estate.
  • Quite a few custodians wish to avoid the accounting complications of tracking the remaining interests should beneficiaries choose to take unequal distributions from the original account. Custodians want everything coordinated and separate accounts created at the same time. This often presents real problems like you have here. On the plus side, the IRS will almost certainly waive any penalty if the year of death RMD does not get completed before year end. It could be taken in 2014 and Form 5329 filed to request the penalty waiver.


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