Decedent age 90 dies in 2023 with Estate Listed as Beneficiary. No RMD taken in 2023, Can Estate Distribute IRA to Bene’s?

Submitted by Carla Campbell on Mon, 2023-11-20 22:31

A single 91 year old passes away without taking his 2023 traditional IRA RMD. His Estate is listed as the beneficiary of his IRA.

Decedent has a will that lists beneficiaries with the following gifts – pecuniary gifts, specified gifts of real estate and investment accounts and a non-spouse residuary beneficiary for the estate remainder after taxes, admin etc.

If cash is not available to pay the listed pecuniary gifts, can these gifts be satisfied with a distribution of a separate inherited IRA in lieu of the cash pecuniary gifts?

Who is responsible for taking and reporting the 2023 RMD? Does this RMD get reported on 2023 decedent 1041? or a 2023 Beneficiary 1040?

Must the entire IRA be distributed to the Estate at death and incur a major tax liability? Or is there a tax planning opportunity for IRA distributions to the Beneficiaries? e.g.

Can the IRA be distributed annually to the beneficiaries based on the decedents single life expectancy factor from the table for the decedents age in the year of death since the decedent already started RMDs before death?

Single life expectancy age 91 = 5.3

A 706 for the estate is not required due to exemption limit.



Submitted by Alan - IRA critic on Tue, 2023-11-21 16:12

  • An in kind distribution of an inherited IRA (an IRD asset) would generate taxes for that beneficiary when the IRA was distributed, while a pecuniary benefit would not. The executor would be liable for failing to adhere to the will provisions.
  • Either the estate or the beneficiaries of the estate could complete the year of death RMD. This distribution is reported by the recipient on their tax return for the year of the distribution.
  • In order for the estate to be closed in a reasonable time, the executor would have to assign the inherited IRA to the estate beneficiaries, but such assignment would not satisfy a pecuniary bequest because taxes would be due when the beneficiary takes a distribution. 
  • The RMD for the inherited IRA would be based on the remaining single LE of the decedent. The first divisor for 2024 would be 4.3.

Submitted by David Mertz on Tue, 2023-11-21 18:36

  • It sounds like this estate plan was not well thought out.  As Alan-iracritic mentioned, IRD is not the same as cash due to the tax implications embedded in IRD.  My guess is that if an IRA distribution is needed to satisfy a pecuniary bequest, the estate would have to obtain the distribution and would be responsible for any resulting tax liability.  I don’t see how it would be permissible to pass any tax implications through to the recipient of the pecuniary bequest or to any other estate beneficiary.
  • If the estate takes an IRA distribution to obtain the necessary cash, that distribution would satisfy some or all of the 2023 RMD.
  • I also question “specified gifts of investment accounts.”  If the investment accounts are intended to go in their entirety to particular estate beneficiaries, what was the point in making the estate the beneficiary of these accounts instead of just naming the intended recipients as the beneficiaries of these accounts unless these accounts were also intended to be available as a source of cash to satisfy pecuniary bequests and estate expenses.

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