First year’s MRD and beneficiary life time withdrawals
Lets say an IRA (or QRP) holder turns 70.5 in 2006 but dies prior to the RBD of 4/1/2007, and lets say that of the $15,000 MRD, he had only withdrawn $5,000 as of his date of death. How is the remaining $10,000 of the RMD treated. That is, must this be taken out proportionally by the named beneficiearies and includable as income to them by 4/1 of 2007? If not, what is the requirement concerning this unwithdrawn portion of the original MRD of the decedent ❓
BruceM
Permalink Submitted by Alan Spross on Wed, 2007-10-31 01:45
Hi, Bruce.
The key here is that the owner died PRIOR to his RBD and you are not dealing with a sole spouse beneficiary.
In this case, the $10,000 “shortfall” and the year 2006 become immaterial and can be ignored. The non spouse beneficiaries start their own RMDs in 2007 using the single life expectancy table, and they have until 12/31/07 to take the RMD.
Permalink Submitted by BruceM on Wed, 2007-10-31 16:51
Thanks Alan
Would it make any difference if the spouse were the sole beneficiary, or because he died prior to RBD, does it make no difference who the beneficiary is or what withdrawals had been made (other than the estate having to include them on the decedent’s final 1040), and that who ever the beneficiary(ies) are as of 9/30 of the following year and what their election for withdrawal is would determine what happens next.
BruceM