RMD
Taxpayer dies in 2010 before taking RMD. Beneficiaries are 50% spouse and 25% ea to 2 children. Can the spouse take the RMD or does it have to be split among the three?
Taxpayer dies in 2010 before taking RMD. Beneficiaries are 50% spouse and 25% ea to 2 children. Can the spouse take the RMD or does it have to be split among the three?
Permalink Submitted by Joseph Arsenault on Wed, 2010-08-04 19:44
Assuming the taxpayer was 70 1/2 or older this year, his final RMD needs to be pulled out by Dec 31st. This will go on his final 1040. The spouse has multiple options, she can rollover the funds to her own account, keep it as an inherited IRA or wait until the kids distribute the funds to an inherited IRA and re-title the current account. If the spouse is either 70 1/2 or keeps the account as an inherited IRA, her first RMD will be due by Dec 31st of 2011, along with the kids. Each individual will be required to take their own RMD based on their ADP (life expectancy). The kids will use the single life table. The spouse, if she rolls the money over will use the Uniform Lifetime Table I believe. Hope that helps some. If the spouse is under 70 1/2 she may want to rollover and defer the RMDs until she is 70 1/2 as well.
Permalink Submitted by Alan Spross on Wed, 2010-08-04 20:39
I generally agree with Joe except that any distribution, RMD or otherwise, cannot go on the taxpayer’s final 1040. It must be reported on the return of the recipient of the distribution, and the IRA custodian should reflect that on their 1099R.
With respect to the 2010 RMD not taken by the decedent, the IRS is satisfied as long as any or all of the beneficiaries take out the RMD in some combination. Of course, if one of them takes the full RMD, then the remaining beneficial interest of 50-25-25 needs to be readjusted. So the readjustment issues need to be weighed against the actual need of each beneficiary for funds. If it does not matter to them, each taking out their respective portion of the RMD will avoid the rebalancing of the remaining shares.
Spousal rollover and RMD options generally spin off the owner’s death pre or post his RBD, not reaching 70.5.
Permalink Submitted by Joseph Arsenault on Wed, 2010-08-04 22:34
Alan is right here, the remaining balance of the RMD is taken by the beneficiary and reported as such. Thanks for the catch and correction Alan.