Inheriting benef IRA RMD?
Mother passed away in 2006 with 300K in IRA. This was correctly transferred to benef IRA for son. Now son has died and his sister is the named beneficiary. The problem is the son never took RMD’s from benef IRA. Does daughter have to complete IRA distribution within 5 years of mother’s death or can she take it out over her deceased brother’s life expectancy?
Permalink Submitted by Anonymous (not verified) on Wed, 2009-02-18 19:34
If the IRA contract does not require the 5 year rule, the sister can restore the life expectancy distributions that her brother should have taken, per PLR 2008 11028:
http://www.financial-planning.com/fp_issues/2008_7/saving-stretch613061-…
In addition, there is no reason that she cannot also request that the excess accumulation penalties for 2007 and 2008 be excused for Reasonable Cause. See p 6 of the 5329 Inst. She should make up the delinquent life expectancy distributions for 2007 and 2008 plus any RMDs her mother did not take. She should then be able to continue using his non recalculated life expectancy divisor even if the IRS decides to bill out the excess accumulation penalties.
Permalink Submitted by Anonymous (not verified) on Wed, 2009-02-18 19:42
I was assuming it would default to the the 5 year payout. This is excellent news!! thank you for your help and link to very pertinent article