RMD in year of death, trust named as beneficiary to IRA
IRA owner has been taking RMDs for several years and died in 2015 before taking the RMD for 2015. The trust is named as beneficiary. The trustee is in the process of establishing beneficiary IRAs for the beneficiaries of the trust. How is the RMD for 2015 done at this point? The custodian won’t do it in the existing IRA and says the beneficiaries will be responsible for their proportionate share of the RMD once the assets have been transferred to their respective beneficiary IRAs.
Then please confirm that in future years RMDs will no longer be based on the life expectancy of the deceased but instead based on the life expectancy of the beneficiary. In particular, please confirm that when there are multiple beneficiaries to the trust, each beneficiary will have to take RMDs based on the life expectancy of the oldest beneficiary of the trust.
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2015-07-01 18:20
This custodian is taking the opposite approach of most of them, who usually push for the RMD to be distributed to the current beneficiary before funds are transferred to new inherited IRAs. The IRS does not care as long as the year of death RMD is distributed to beneficiaries in any proportion by year end. The IRS will also waive the 50% penalty if the RMD does not get distributed in the year of death if a 5329 waiver request is filed. In this case the trust apparently allows the trustee the option of distributing assets from the trust including the IRA, but each beneficiary RMD in years after the year of death will continue to be based on the oldest trust beneficiary
Permalink Submitted by Jack Thomas on Wed, 2015-07-01 18:22
Thanks for the quick response.