Non-Spouse bene RMD. Bene didn’t inherit until year after death.

Submitted by Carl Watson on Thu, 2016-12-29 22:14

IRA owner = Mother (< 70.5)
Beneficiary = Daughter

Mother dies towards end of 2015. Isn’t reported to custodian until 2016.
Daughter opens IRA-BDA in February 2016 and receives inherited account.

The wording says the daughters first RMD must occur the year following the year of DEATH. Technically, that is by 12/31/2016. However, the custodian was not notified and did not freeze the account until mid-January 2016. So as far as their records are concerned, the mother did not pass until 2016.

Does that give the daughter until 12/31/17 instead?

If it should be taken in 2016, does the daughter use the balance of the decedent? Because since it wasn’t inherited until 2016, the beneficiary had no 2015 year-end balance.



Submitted by Alan - IRA critic on Thu, 2016-12-29 22:30

  • It was inherited in 2015 despite the delay in re titling the IRA. Mother is treated as deceased on the date stated in the death certificate submitted to the IRA custodian. FIrst beneficiary RMD is due by 12/31/2016 unless daughter chooses the 5 year rule. The 2016 beneficiary RMD is calculated using the account balance on 12/31/2015 and daughter’s age at the end of 2016.
  • In some cases the beneficiary is not even aware of an inherited IRA for years, and in other cases may simply procrastinate taking action to re title the IRA for a considerable time. None of this changes the RMD requirements or deadlines, however the IRS is often willing to waive the penalty for “reasonable cause” if a 5329 is filed for each year of delinquency. This also applies to the year of death RMD which the beneficiary must complete if the decedent did not. Of course, in this case Mother passed prior to her RBD so there is no year of death RMD required of the beneficiary.

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