RMD
A woman died in late 2008 with a substantial IRA. She had taken her RMD for 2008 prior to her death and left the IRA to her two daughters equally.
One daughter transferred her share into an IRA (beneficiary) in a timely manner in 2009 and now will begin taking the appropriate RMD. The other daughter had her broker fill out the paperwork to transfer her 1/2 of the IRA into her beneficiary IRA. This was transferred; however, he forgot to transfer one asset which is still sitting in her deceased mothers IRA. What is the tax situation regarding the 2010 RMD and also can the daughter still transfer the proceeds into an inherited IRA or just cash it out and pay taxes on 100% of the proceeds?
Ed
Permalink Submitted by Alan Spross on Wed, 2010-08-04 22:06
When the first daughter created her own separate beneficiary account, the original account became a separate account for the other daughter. The other daughter therefore now has two beneficiary IRA accounts and since they were inherited from the same decedent, her RMDs can be aggregated. But it would probably be better if she just took the appropriate RMD for 2010 separately from each account prior to combining them by direct transfer. I assume each of those accounts are propertly titled in beneficiary form.
Therefore, there is no consequence of not completing the full transfer initially. Her 2010 RMD will be the same in total and the two accounts can still be consolidated.
Permalink Submitted by [email protected] on Thu, 2010-08-05 08:12
I Guess I did not make myself clear. The second daughter never moved (retitled) some of her inherited IRA and it is still in her deceased mothers name.
I understand the tax ramifications of the inherited IRA’s that are properly titled but it is the one that the deceased mother still owns that I need to understand. My gut reaction is that those proceeds are now 100% taxable.
Ed