IRA Beneficiary – Estate
90 year old client passed away with an IRA, with Estate as beneficiary, already completed RMD for 2024
Her only kin and sole will beneficiary is her sister in law, age 85. I have been told by the custodian that the funds would first be moved into an Estate Account as Beneficiary IRA and then can be moved into a Beneficiary IRA for the sister in law.
What are the RMD options? Does the Estate have to take the IRA for any year before the funds can be moved into the SIL Beneficiary IRA?
Thanks
Matt
Permalink Submitted by Alan - IRA critic on Thu, 2024-10-31 17:57
The estate does not have to complete the 2025 RMD before assigning the inherited IRA out of the estate to the sister in law unless the executor wishes to. The sister in law can take the 2025 beneficiary RMD after receiving her own inherited IRA. But assignment does not change the RMD calculation, which is based on the decedent’s remaining single life expectancy. If decedent would have still been 90 at the end of 2024, the 2025 RMD divisor will be 4.7, then reduced by 1.0 for each year after 2025. The inherited IRA should last until 2029.
It’s fortunate that the IRA custodian will cooperate with an assignment request. This is clearly allowed by the IRS but many custodians will not cooperate even though they know this has been allowed for years in several IRS letter rulings.
Note that these rules were not affected by the Secure Act.