IRA owner died after RDB without taking 2007 rmd
A 75 year old IRA owner died without taking the current year distribution. Not a taxable estate, so no estate taxes are planned. Two IRA accounts exists: one naming children and one naming grandchildren. When does the IRA distributions need to be made and from which IRA account, or does it matter? Is there an IRD issue? Who actually pays the tax on the distribution? Obviously, the beneficiaries can and should distribute to “bene-IRAs” for future distributions, but the key issue is what about the current RMD that has not been taken?
Permalink Submitted by Alan Spross on Fri, 2007-12-14 22:10
The remaining RMD obligation for 2007 or any prior years should be taken before year end. If not, the additional task of completing Form 5329 and requesting that the excess accumulation penalty be excused will be faced next year.
The IRS is satisfied if the RMD is distributed, and it does not matter which IRA supplies it. Therefore, the best approach is to conference among the beneficiaries to see which one actually wants a distribution. If there is still no agreement, they should each take their apportioned share of the RMD. Each beneficiary will report the income for whatever distribution they receive. If the RMD is not taken equally, accounting for distributions needs to be made to be sure that the remaining share for each beneficiary is properly documented. The IRA custodian would probably be happier if each the RMD were equally spread to simplify that accounting.