RMD for Deceased Account Owner
Client over age 70 1/2 dies in November 2009. Financial Institution has RMD set up as an automatic transfer (even though 2009 RMDs are not required).
RMD transfer occurs after the death of the client. Proceeds deposited by financial instituion in to an Irrevocable Trust Account. Financial Instituion does not know that the
Trust is Irrevocable because previous deposits were made into “Revocable Trust Account” which was converted at the death of the client. Beneficiary of IRA is not the Trust, but rather son and daughter.
Question #1: Should Trust return distribution to son and daughter?
Question #2: Who should report IRA 1099R income for 2009? Decedent, Trust or Beneficiary?
Help!
JB
Permalink Submitted by Alan Spross on Fri, 2010-02-19 02:43
This sounds like one of those situations where the parties involved may resolve it more efficiently without involving the IRA custodian and the IRS, especially if the amount distributed to the trust is modest and the son and daughter are the the same as or have a positive relationship with the trust beneficiaries. A tax adjusted transfer may work, but only if there are not other specifics that eliminate that possibility. Sometimes the fewer parties involved the better.
Rolling the RMD back is not possible if 60 days has passed since the distribution(s) were made.