RMD due in year of death?
Client, died April 2014 at age 75 after taking RMD’s from her IRA since turning 70.5.
At the time of her death she had withdrawn from her IRA $20,000. Her 2014 RMD is $25,000 so she was short $5,000 of satisfying her RMD for 2014.
Her 2 children are the beneficiaries and wish to transfer their share to an inherited IRA in 2014.
I believe the 2 children have until Dec 31 of next year to take their first RMD (which will be based on their life own expectancy).
So if the two children do not take their first RMD until 2015, is it necessary to complete the deceased client’s RMD in 2014 by taking a withdrawal from the current (deceased) IRA or from the new Inherited IRA’s?
Thanks!
Permalink Submitted by Alan - IRA critic on Tue, 2014-05-13 00:15
They can take the balance of the year of death RMD before or after establishing the separate inherited IRA accounts. While the year of death RMD does not have to be taken 50-50 by each 50% beneficiary, it certainly makes accounting easier if they do. But one of the beneficiaries could take out the entire 5,000 RMD balance if they need the money and the other does not, and then if separate accounts are established at the same time, one of them would have 5,000 less than the other. The year of death RMD should be completed this year, otherwise a 5329 will have to be filed to request waiver of the 50% penalty with each of their 2014 tax returns.