IRA-RMD
My father passed away in 2014 ,he was 84, birthday July 21,1930. His IRA was put into an estate, his wife was not the beneficiary, my brother took care of my mom out of the estate (nursing home, med.etc) until she passed away in 2016 at age 83. As stated in the will the remaning money was distributed equally amongst 4 children in november of 2016 from an inhereited IRA. There were no “designated beneficiarys” from the estate. The questions are- whos age do we use to determine the RMD for 2017? (everything for 2016 is taken care of) Also which table do we use as the deciding factor? The Single Life Table or the Uniform Life Table? Thank you so much for your help.Hopefully I have given you all the information you need. Kari Kuball-507-521-0276
Permalink Submitted by Alan - IRA critic on Mon, 2017-02-27 19:47
Not sure what you mean by “IRA was put into an estate”. How much of the IRA was actually distributed to the estate? Did your brother as executor then assign what remained in the IRA out of the estate to separate inherited IRAs for each of the children? If so, because your father passed AFTER his required beginning date for RMDs, the beneficiary RMDs starting in 2015 are based on the remaining life expectancy of your father. Being 84 in 2014, the first RMD divisor for 2015 from the Single life table would be 7.1, then 6.1 for 2016 etc. with the divisor reducing by 1.0 for each successive year. Further, if your father had not completed his RMD for 2014 before passing, the estate was responsible for completing that RMD and it is very likely that the distributions to the estate accomplished that. Each beneficiary inherited IRA would therefore be drained before the end of 2022, with a very small amount left in the accounts at the end of 2021.
Permalink Submitted by Kari Kuball on Mon, 2017-02-27 23:41
When my father passed away all the money he had invested in his IRA was moved to an estate, because if my mom would have been the beneficiary,my sister who was my mothers financial power of attorney would have gladly helped herself to all of it,so therefore we had to leave in the estate untill mom passed away. Then the remaining money(approximately$260,000.00) was divided equally to us 4 children. the money was not put into an IRA for us children, we each just took the money and invested where we chose. The RMDs were all taken care of for 2014,15 and 16. So from your response, that I understand ,we have to use my fathers age at time of death-84,adding 1 .0 for each successive year from the Single Life Table. Pretty much sums it up?
Permalink Submitted by Alan - IRA critic on Tue, 2017-02-28 00:15
Sorry, but still not clear because this sounds like the IRA might have been drained in a lump sum paid to the executor of the estate rather than the IRA being continued with the estate as the beneficiary. If so, the IRA ended when the IRA no longer had a balance, and there would be no RMDs after that. However, that would also have caused a large tax bill for the estate itself when it received the IRA distribution. That tax bill could have been paid by the estate on it’s 1041 filing OR it could have been passed through to the beneficiaries of father’s will. Put another way, did your brother just distribute from the IRA enough for your mother’s expenses or did he take all the money out of the IRA and hold it all in the estate?
Permalink Submitted by Kari Kuball on Tue, 2017-02-28 16:24
The IRA was continued with the estate being the beneficiary. Distributed from there to the children as an Inhereited IRA (but the childrens names were not listed as designated beneficiaries) after moms death. How do we determine the RMD for 2017?
Permalink Submitted by Alan - IRA critic on Tue, 2017-02-28 17:22
OK. The RMDs for the inherited IRAs of all beneficiaries are not changed due to the separate inherited IRA account. They each take their share of the prior year end account balance as the value on which the RMD is calculated but must continue to use the remaining life expectancy of your father as indicated in my first post earlier. In other words, having individual inherited IRAs now does not make the children designated beneficiaries, so their RMD divisors do not change from the divisor that the estate would have used.
Permalink Submitted by Kari Kuball on Tue, 2017-02-28 17:47
I understand, thank you for all your time on this matter.