Beneficiary IRA
In November 2017, client’s mother-in-law who is taking RMDs from an IRA (balance about $25,000) dies. Her son (sole beneficiary) takes the IRA as an inherited IRA. The son dies in November of 2018 without taking an RMD. My client (sole beneficiary of her now spouses’s inherited IRA) puts the IRA in her name as an inherited IRA.
1. She needs to start taking RMDs based on her life expectancy. The first one by 12/31/19. Correct?
2. She should take an RMD out now for the RMD that was missed in 2018. It would be based on her former spouse’s life expectancy and she will owe a 50% penalty. Correct?
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2019-03-06 18:08
The son’s single life expectancy must continue to be used by his successor beneficiary. Client needs to make up the 2018 beneficiary RMD ASAP and file Form 5329 for 2018 to request the penalty waiver. The IRS almost always grants the penalty waiver in cases like this.Client’s own beneficiary RMD must also be completed by year end 2019 (calculated using the divisor for 2018 less 1.0. The son would also have been responsible for completing his mother’s 2017 RMD if she did not complete it, but the IRS has not indicated that this responsibility would pass to the client, so client just needs to take the 2018 RMD and not be concerned about 2017.
Permalink Submitted by IRAQuestion5 on Fri, 2019-03-15 19:08
Does the client need to take out the earnings on the missed RMD as well as the missed RMD?
Permalink Submitted by Alan - IRA critic on Fri, 2019-03-15 20:54
No, just the missed RMD amount.