Multiple Beneficiaries
After my mom passed, 2 IRA’s were divided into 6 IRA holding accounts. The RMD was not taken in year of owners death. Owner 84 years old.
Since owners was alive the uniform table must be used for that year only, then as beneficiaries, in the year following we use Life expectanc table.
To make up her 2010 miss we have to use the 2 ira’s totals on dec 2009 and multiply by 15.5???? Then for 2011 we can use the totals in each bene account.???
Hope this is clear.
JIM
Permalink Submitted by mk foss on Sun, 2011-06-05 23:33
If these accounts were owned by the 84 year old decedent, then 15.5 is the factor to divide into the 12/31/09 balance of all IRAs. If she was 84 when she died but would have been 85 before 12/31/10, you use the factor for age 85 which is 14.8.
If she did not own the accounts but she was a beneficiary, you use the single life table and more information is needed. By a beneficiary, I mean that the axxount listed the name of the original owner – not a rollover account. From your post though, I think that they were her accounts and the uniform table is appropriate.
The beneficiaries should calculate the missed 2010 distribution and take their respective shares ASAP. Then each of them can file Form 8606 and request a waiver; the waiver request should emphasize that the missed distribution has been taken.
For 2011, each beneficiary will use the 12/31/10 balance in their own account and their age in 2011 to detrmine the divisor from the single life table. In subsequent years, they will reduce the 2011 factor by 1.0 to get the next year’s divisor (this is presuming that the 84 year old was an owner and not taking IRAs as a beneficiary herself).
Permalink Submitted by Anonymous (not verified) on Mon, 2011-06-06 13:22
I think mgtf4cpa meant a Form 5329 to request the waiver — NOT 8606.
Permalink Submitted by mk foss on Mon, 2011-06-06 16:22
I did mean a form 5329 – sorry, shouldn’t answer questions on a Sunday!
MKF
Permalink Submitted by Jim Bertucci on Sat, 2011-07-09 20:39
Thanks for the info, but let me relive some here please. We are tight on the RMD’s for beneficiaries and we each use the Life Expt table. Where we are still confused is with the partial RMD Mom made before she died. Does each beneficiary file form 5329 with section VIII reflecting only their share of the missing RMD.
To make it easy, let’s say missinmg is $6000.00 and each bene owes $1000.00
Anmd lastly how is the top portion of the 5329 filled out. I would think Mom’s return info????
Thanks so much This will complete a very long journey.
JIM
Permalink Submitted by Alan Spross on Sat, 2011-07-09 22:27
JIM,
The IRS does not provide clear instructions on the reporting they desire in this situation. Therefore, I will provide what appears to be most compliant with the IRS Regs for this situation.
While the 2010 RMD amount was due from your Mother before 12/31/2010, the fact that she passed prior to the end of the year relieves her of that responsibility. Her final return should only report the portion that she distributed before passing. No 5329 needed with that return.
The obligation to complete the remainder of her 2010 RMD fell on the beneficiaries, but it is very commonplace that this does not get calculated and distributed by the end of the year of the owner’s death. The 5329 is needed for each beneficiary for 2010, since the beneficiaries are the ones that assumed the responsibility for completing the 2010 RMD. That said, there is no requirement that the beneficiaries EACH take their prorated share of the shortfall. For example, if 6,000 remains and one beneficiary has a need for the extra money, that one beneficiary can take out all 6,000 and the rest do not have to share in the 2010 RMD. If each wants to take 1,000, that is fine also. But the 5329 for 2010 should be filed for all beneficiaries requesting that the penalty be waived for the applicable reason and include a notation showing which beneficiaries took how much of the 6,000 outstanding RMD. The IRS will almost certainly waive the penalty. Hopefully, the beneficiaries can coordinate this response with their 5329s for 2010.
If they have already filed 2010, these 5329 forms can be send in alone. Each respective beneficiary SSN appears on their submitted form.
None of the above affects their 2011 RMDs at all based on the separate account rules. The makeup RMD plus the 2011 RMDs will all be taxable in the year taken, ie 2011. No 5329 needed for 2011, just 2010.
Permalink Submitted by Jim Bertucci on Sun, 2011-07-10 01:39
Alan,
My heart goes out to you. I was kinda close, but no cigar as they say. This area of finanace for sure is very vague from IRS. We can now put all to rest.
Thanks again for your help and quick reply.
JIM
Permalink Submitted by Jim Bertucci on Sun, 2011-07-10 05:23
Alan,
For the form 5329 is all the top info and section 8 info from Mom’s tax return Like her social security, address,etc etc. And then in Section 8 the totals
on both IRA’s.
JIM
Permalink Submitted by Alan Spross on Sun, 2011-07-10 16:38
No, the heading info shows the SSN of each beneficiary that files one, and all of them should file a 5329 since they were all responsible for completing the 2010 RMD and could be penalized. Even if only one beneficiary took out the entire 6k, each of them should still file the 5329 requesting that the 2010 penalty be waived and showing which beneficiaries have now taken out the total of 6k.
Section VIII:
Line 50 = the total RMD required for 2010 (add up the RMDs for each of the two accounts)
Line 51 = the total amount your mother distributed
Line 52 = enter “RC” and 6,000 (or the missing amount) on the dotted line before the “52” – and enter -0- on 52 itself
Line 53 = -0-
The explanation for the waiver request (RC= reasonable cause) should explain why the RMD was not completed, and the names and SSNs (if possible) along with the amounts that each beneficiary withdrew to make up the full 6,000. While not required, it could be helpful to include copies of the account statements showing the 6,000 of distributions.
* The reason the beneficiaries file the 5329 under their own SSNs is because they inherited the obligation to complete the RMD by 12/31/2010 and they would be the ones penalized if the IRS levied a penalty.
It would help if the IRS further clarified all this on the 5329 Inst for beneficiaries, since many decedents are not likely to have completed their RMDs.