Permalink Submitted by Alan - IRA critic on Tue, 2024-01-09 15:50
Most IRA agreements make the owner’s estate the default beneficiary, but the agreement should be checked to be sure. If the estate is the beneficiary, then decedent’s will would determine the beneficiaries of the estate, and if no will the intestate provisions of the state. Once the executor or PR determines the estate beneficiary, distributions can be made to the estate to pay final bills and if there is enough left over the executor could assign the IRA out of the estate to the estate beneficiaries in separate inherited IRA accounts. The RMD distribution period for these separate inherited IRAs will be the same as for the estate, which is the remaining single life expectancy of the decedent.
Permalink Submitted by Robert Wright on Wed, 2024-01-10 16:41
Alan,Thank you for your response.As a follow up, the deceased IRA owner turned 84 in 2023 and died in 2023.My follow up quesiotn is:What is the first RMD year for the beneficiaries of the estate: The year of death or the year after the year of death?Do they use the LE of the deceased IRA owner as of the first RMD year?Do beneficiaires of the estate use the minus 1 for years 2, 3, …+ ?Do RMDs then start in the year following the year of death for estate beneficiaires?i.e.” Do we use the LE factor for 2024 (the year following the year of death) when deceased IRA owner would have been 85 =8.1Then minus 1 for remaining years: 2025 = 7.1, 2026 = 6.1, …OrIs first RMD year = 2023 (year of death) at age 84 and LE = 8.7Then minus 1 for remaining years: 2024 = 7.7, 2025 = 6.7, …
Permalink Submitted by Alan - IRA critic on Wed, 2024-01-10 16:55
The beneficiaries are responsible for completing the owner’s 2023 RMD if the owner did not complete it before passing. The deadline for that is the due date for the 2023 return plus extensions.
Beneficiary RMDs begin in 2024. The IRA owner’s age in 2023 was 84 and the divisor is 8.7 which is then reduced by 1.0 each year thereafter. Therefore, the 2024 divisor is 7.7, then 6.7 etc., as stated as your latter example.
Permalink Submitted by Alan - IRA critic on Tue, 2024-01-09 15:50
Most IRA agreements make the owner’s estate the default beneficiary, but the agreement should be checked to be sure. If the estate is the beneficiary, then decedent’s will would determine the beneficiaries of the estate, and if no will the intestate provisions of the state. Once the executor or PR determines the estate beneficiary, distributions can be made to the estate to pay final bills and if there is enough left over the executor could assign the IRA out of the estate to the estate beneficiaries in separate inherited IRA accounts. The RMD distribution period for these separate inherited IRAs will be the same as for the estate, which is the remaining single life expectancy of the decedent.
Permalink Submitted by Robert Wright on Wed, 2024-01-10 16:41
Alan,Thank you for your response.As a follow up, the deceased IRA owner turned 84 in 2023 and died in 2023.My follow up quesiotn is:What is the first RMD year for the beneficiaries of the estate: The year of death or the year after the year of death?Do they use the LE of the deceased IRA owner as of the first RMD year?Do beneficiaires of the estate use the minus 1 for years 2, 3, …+ ?Do RMDs then start in the year following the year of death for estate beneficiaires?i.e.” Do we use the LE factor for 2024 (the year following the year of death) when deceased IRA owner would have been 85 =8.1Then minus 1 for remaining years: 2025 = 7.1, 2026 = 6.1, …OrIs first RMD year = 2023 (year of death) at age 84 and LE = 8.7Then minus 1 for remaining years: 2024 = 7.7, 2025 = 6.7, …
Permalink Submitted by Alan - IRA critic on Wed, 2024-01-10 16:55
Permalink Submitted by Robert Wright on Wed, 2024-01-10 20:45
Alan,Thank you very, very much.