RMD in Year of Death
If an RMD age individual dies with an IRA during 2019 before taking out their RMD, when does that RMD come out in relation to beneficaries making a claim for the money, and when is the first inherited IRA RMD due?
Thanks
The IRA custodian will likely want to trustee-to-trustee transfer the IRA to a separate inherited IRA for each of the beneficiaries’ shares, making it easier for the IRA custodian to properly report distributions made to the beneficiaries. There is no problem completing the year-of-death RMD after the transfers since the income is reportable on the tax returns of the beneficiaries who complete this RMD.
Permalink Submitted by Alan - IRA critic on Wed, 2019-06-12 15:51
The year of death RMD, if not completed by the decedent, becomes the joint responsibility of the beneficiaries. This RMD is still due by the end of the year of death, but for various reasons this deadline can be missed. If so, Form 5329 must be filed to request the penalty be waived for reasonable cause. The IRS almost always grants the penalty waiver. Inherited IRA RMDs are due by the end of the year following the year of death when the life expectancy method applies. In other cases the 5 year rule will apply.