Setting up a beneficiary distribution account (BDA) should only take a few days. The IRA custodian will need a death certificate, taxpayer ID (SSN) for the beneficiary and other basic information. A successor beneficiary should be named as well. In fact, this information is required to take ANY distributions since the original IRA apparently is still in the decedent’s name and SSN.

An RBD technically only applies to IRA owners. The beneficiary RMDs depend on whether the 5 year rule or life expectancy will be used. If IRA owned passed prior to their RBD, the beneficiary can still preserve life expectancy distributions in most cases by taking the past due RMDs for each year and paying the 50% excess accumulation penalty for each of those years. So there should be no problems getting the account properly re registered in time to get these RMDs out before year end. This is a good year to do that since there are NO 2009 RMDs required. All client needs to do is distributed what would have been the correct RMDs for the prior years starting in the year after the parent’s death. The account balance at each year end would have to be determined, but the RMD divisor needs to be determined only for the first RMD year, then reduced by 1.0 for each year thereafter.

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