Timing of RMD in year of anticipated death
Client is 94 and beginning to fail, we have not taken the RMD for this year yet.
Client believes they will die this year, is it better to go ahead and take the RMD while he/she is alive or wait?
What are pros and cons?
The equal beneficiaries are three adult children, so as non spouse bene’s, they can roll to a bene IRA and will be required to distribute the entire amount within ten years correct?
Permalink Submitted by Alan - IRA critic on Fri, 2022-02-25 21:26
Whether client takes the 2022 RMD while living or leaves it to the beneficiaries, who must jointly in any combination complete the year of death RMD, depends on the tax brackets of the client v those of the beneficiaries and the ability of the beneficiaries to coordinate to complete the year of death RMD by the end of 2022 to avoid having to file a 5329 to request a penalty waiver. Traditional thinking is that the client should take the RMD early this year to get it out of the way, but this is not a requirement. This question takes on even more meaning if the IRA beneficiaries differ from those of the estate since the RMD timing determines which heirs end up with these assets or whether the final estate will be solvent to pay all final expenses and taxes. Yes, the IRA beneficiaries would generally be subject to the 10 year rule except for disabled beneficiaries.