Inhertied IRA

Submitted by Steven D Meahan on Wed, 2020-01-22 23:06

My friend’s father died in 2018 at age 94. The son did not setup an Inherited IRA in his own name but did take the 2018 RMD. He has thus far refused to setup an Inherited IRA in his own name and did not take an RMD in 2019. Can he just leave the money in the old account and take it all prior to the end of the 5-year period without a penalty?



Submitted by Jose Morales on Wed, 2020-01-22 23:26

Because the IRA owner was deceased after their Required Beginning Date there can be no break in taking RMDs.  In the year of death the IRA owner’s RMD had to be taken, and it was reported to be taken in the original post.  Short of the named beneficiary properly disclaiming, they became the Designated Benefiicary on September 1st of the year following the year of death.  That makes the responsibility to take the beneficiary RMD each year theirs alone.  There is no 5 year option under these circumstances.

Submitted by Alan - IRA critic on Wed, 2020-01-22 23:38

  • He needs to make up the 2019 beneficiary RMD and file Form 5329 to request waiver of the hefty 50% penalty, then continue to complete life expectancy RMDs based on son’s age at the end of 2019 as the initial 2019 divisor. He then reduces the divisor by 1.0 each year thereafter. 
  • Either this IRA custodian allows separate accounting in the same IRA account which is very rare, or the son actually has his own inherited IRA and does not realize it. A custodian will not make a distribution to a beneficiary unless the death certificate and beneficiary contact info and SSN have been provided. Son should look at the 2018 1099R reporting the year of death distribution that he received, unless he actually meant that his father took it before passing.

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