Deceased IRA RMDs

Submitted by David Mitchell on Wed, 2019-05-15 12:23

If an IRA owner age 75 passes away and he did not yet take his RMD for the year , and one beneficiary already moved their portion to an inherited IRA is it okay if the other beneficiary fulfill the whole RMD and then moves their funds to thier own inherited IRA?



Submitted by Alan - IRA critic on Wed, 2019-05-15 15:11

The year of death RMD can be completed in any combination by multiple beneficiaries. However, almost all IRA custodians are not going to allow any access to the inherited account until separate accounts are established titled in beneficiary form. The year of death RMD is then distributed from the separate inherited IRA account. Therefore, in your case the first beneficiary can still satisfy any portion of the year of death RMD they wish to. If the other beneficiary WANTS to distribute the entire remaining year of death RMD they certainly can, but cannot do this until they also have established a separate inherited IRA under their own SSN. Finally, if the year of death RMD is not completed by the end of that year, it can be completed in the following year but that will require a Form 5329 filing by the beneficiaries to request the penalty waiver. The IRS almost always grants the waiver.

Submitted by David Mitchell on Wed, 2019-05-15 15:35

Does your answer remain the same if the client passed away last tax year, but is splitting up the IRA this tax year? Can the individual that didnt take their portion yet as an inherited IRA take the full RMD?

Submitted by Alan - IRA critic on Wed, 2019-05-15 16:43

  • Yes, either beneficiary can satisfy the year of death RMD. One can distribute the entire RMD, part of it, or nothing and have the other beneficiary complete it.  This takes communication between the two. If there is any doubt that the other beneficiary will follow through, if one beneficiary takes their pro rata share, they will not be responsible for the other beneficiary not taking their own share.
  • In this case, the beneficiary that has not yet established a separate inherited IRA can do so, and then can take out the full year of death RMD. However, Form 5329 will have to be filed for 2018 to request the penalty waiver since the year of death RMD is being completed in the following year. This form can be filed by itself without a 1040X, but cannot be filed until at least that beneficiaries share of the year of death RMD has actually been distributed.

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