Client dies & satisfies a portion of his 2014 RMD…
We have a client that has been withdrawing funds from his IRA on a monthly basis and has recently passed away without satisfying his full 2014 RMD. The spouse who is 74 is the primary beneficiary of his IRA. Is it best to satisfy his RMD after the funds are moved into her IRA (for tracking purposes I would do a separate withdrawal for his amount) OR can we go ahead and send the remaining amount directly from the deceased IRA to the bank account…I don’t know if this option is legal since the client is deceased.
Permalink Submitted by Alan - IRA critic on Wed, 2014-05-28 23:27
First, an inherited IRA must be established by the beneficiary in order for any distribution to take place. The surviving spouse can ocmplete the year of death RMD from the inherited IRA before rolling over the rest, and this is technically correct because an RMD cannot be rolled over. Nontheless, the IRS will probably not have a problem if the entire account is rolled over and then the year of death RMD is completed. Either way, the 1099R will be issued to the surviving spouse showing the surviving spouse SSN. Further, if the client died late in the year, the year of death RMD is often not completed until the following year. In that case, the surviving spouse should file a 5329 and request a penalty waiver and the waiver is almost always granted.