RMD during year of death
Client died in Jan 2021. Had not taken his RMD for 2021 yet. does the RMD need to be taken from the account before distributing it to beneficiaries, or do the beneficiaries pay it after they receive it? Our intention is to roll the accounts to inherited IRAs. Thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2021-03-01 23:50
Actually, there is no way for a beneficiary to take a distribution until the inherited IRA is retitled in the name of the beneficiary and almost all custodians create a new inherited IRA for each beneficiary that has submitted their contact info and SS at that time. If there are multiple beneficiaries the year of death RMD not completed by the decedent can be taken in any combination by those beneficiaries. They have until 12/31/2021 to complete the year of death RMD. Thereafter, unless a beneficiary is an “eligible designated beneficiary for the LE stretch, they each will be subject to the 10 year rule, meaning no annual beneficiary RMDs, but each account must be drained by 12/31/2031.