Beneficiary Required distribution
I have been trying to calculate the RMD for a Beneficiary of an inherited IRA. I am getting two different answers.
Here are the facts:
Date of death 4-16-2005
Age of owner at death 81
Age of Non-spouse beneficiary as of 12/31/2008 53
Balance at 12-31-2007 $67,992
The two answers are: $2,172 and $4,595
Can anyone help?
Denise Sowell
Permalink Submitted by Al Fry on Wed, 2008-09-24 16:18
I can see why. as the facts need clarification. Was the non-spouse bene a bene of an inherited IRA, or a Regular Owner IRA?
Permalink Submitted by [email protected] on Wed, 2008-09-24 23:38
An IRA Owner
Permalink Submitted by Alan Spross on Thu, 2008-09-25 01:30
Then 2,172 is correct for 2008 RMD. Any chance the other figure arises from an omitted prior year RMD?
Permalink Submitted by Connie Colonius on Fri, 2008-09-26 17:14
How did you come up with 31.3 as the single life expectancy divisor? Non-spouse beneficiary was 50 in 2005, year of death; would not you start with 34.2 (Table I, single life expectancy) and then subtract 1 for each year that has passed?
The dollar difference is minimal; I’m just curious.
Permalink Submitted by Clyde Wolf on Fri, 2008-09-26 17:42
Connie28,
The beneficiary was 50 in the year (2005) the IRA owner died.
The first distribution is taken by the beneficiary the following year,2006, when the beneficiary is 51.
For that age, the divisor is 33.3.
2 years later (2008) the divisor is 31.3.
Permalink Submitted by Connie Colonius on Fri, 2008-09-26 18:42
Thank you for your prompt answer. I have been working on a similar beneficiary IRA situation; my husband is the beneficiary of his slightly younger sister’s IRA; she died in 2007. She was 74. He was 75. When selecting the proper factor for this year’s distribution from that account, I am using her factor of 14.1 reduced by 1. Pub. 590, p. 37. Am I on track?
Unfortunately her IRA has proved unusually complicated, involving two missed RMD’s, UBTI from a limited partnership that was originally included in her 1040 (by a professional!!!) that required an amended return, etc. , etc.
Luckily, she did take her 2007 IRA RMD properly. Unluckily, there are no Ed Slott experts here in the small western town where we live. Plus my sister-in-law lived in Ohio, which hasn’t helped with logistics. But I am learning a lot as we unravel this mess.
Permalink Submitted by Alan Spross on Fri, 2008-09-26 20:52
Things get a little more complex when the beneficiary is older than the decedent, and the decedent passed after their RBD, as is the case here.
His RMD is based on the LONGER OF your husband’s single life expectancy or his sister’s remaining single life expectancy adjusted from the year of death. The latter will determine the RMD here because it provides a smaller payout (larger divisor).
Her age in the year of death would have been 74 I take it. This is based on the age she would have attained at the end of the year if she lived all year. If it is 74, her divisor from Table I is 14.1 for 2007 and would be 13.1 for this year. If your husband’s age was used and if he would turn 76 by the end of this year, his divisor would be 12.7. Since his sister’s divisor is slightly higher (longer life expectancy), his RMD divisor should be 13.1 for 2008, then reduced by 1.0 for each succeeding year.
This can be rather confusing. See p 36 and 37 of Pub 590 and be sure you are selecting the right starting years for each of their ages, since her starts with the year of her death, and his starts this year.
Permalink Submitted by Bruce Steiner on Sun, 2008-09-28 00:18
This does not seem to be a difficult problem. The lawyer handling her estate ought to be able to give you the necessary advice.