Beneficiary Inheritance distribution options
56 Year Old Daughter died in March of 2016
83 year old Mom Inherited IRA in June of 2016
Mom Died in November of this year now it is going to another daughter who is the sole beneficiary her
age is 52.
What are the distribution options for the remaining daughter age 52?
Does benny loose 5 year option b/c of 83 year old mom
Permalink Submitted by Bruce Steiner on Mon, 2016-12-05 22:14
Permalink Submitted by Alan - IRA critic on Mon, 2016-12-05 23:04
If a disclaimer is not executed for whatever reason, then Mom is still considered the designated beneficiary for RMD purposes. Since the IRA presumably has life expectancy as the default RMD method for designated beneficiaries and Mom would be 84 next year, the RMD divisor would be 8.1 for 2017 and reduced by 1.0 each year thereafter. Without a disclaimer on behalf of Mom, the other daughter cannot use her own life expectancy and would have to continue Mom’s RMD schedule. That is still better than the 5 year rule.
Permalink Submitted by Anthony Perrone on Thu, 2016-12-08 15:09
Why would it be 8.1 and not 15.5 – 1?
Permalink Submitted by David Mertz on Thu, 2016-12-08 17:31
Since Daughter died before her RBD, Mom can either use the life-expectancy rule based Mom’s life-expectancy or the 5-year rule. When using the life-expectancy rule, as beneficiary Mom must use the Single Life Expectancy table (Table I) which shows her life-expectancy are her age in the year following the year of Daughter’s death to be 8.1 years. Since Mom is beneficiary, not owner, the Uniform Lifetime table (Table III) cannot be used to determine her life expectancy.
Permalink Submitted by Anthony Perrone on Tue, 2017-02-14 21:37
Does she take the distribution using the single life table 84 year old at 8.1 and base that value on December 31st, 2016 ?
Permalink Submitted by Mary on Tue, 2016-12-06 04:33
My son inherited a large sum, but under federal and state estate tax limits, does he have to pay an income tax? The accountant for the estate requested my son’s SS #.
Permalink Submitted by Alan - IRA critic on Tue, 2016-12-06 16:35
If he is a beneficiary of the estate, any income generated after the owner’s death will probably be passed through the estate to your son on Form K 1. He will have to report that income on his personal return. Estate tax exemptions do not affect income tax in most cases.
Permalink Submitted by Anthony Perrone on Tue, 2017-02-14 20:32
For the scenario above for the daughter that now inherited the account. Does she take the distribution using the single life table 84 year old at 8.1 and base that value on December 31st, 2016 ?
Permalink Submitted by Anthony Perrone on Tue, 2017-02-14 21:37
Does she take the distribution using the single life table 84 year old at 8.1 and base that value on December 31st, 2016 ?
Permalink Submitted by Alan - IRA critic on Wed, 2017-02-15 00:33
Yes, that is correct. 8.1 divisor for successor beneficiary daughter’s 2017 RMD. 7.1 divisor for 2018 etc.Since the IRA owner passed prior to RBD, there is no 2016 RMD required of anyone.