Beneficiary IRA distributions
I have a client that passed away at age 53 , in December of 2010, his two daughters were beneficiaries of the IRA. They did not actually transfer the funds into their name until May of 2011. What value do I use for their life expectancy distibution, the year end value of his account because they were the beneficiaries of the amount of their initial deposit to their own Bene IRA?
Permalink Submitted by Alan Spross on Wed, 2011-08-03 17:34
They would use the pro rated value of the combined account on 12/31/2010, eg if each inherited 50%, each would use half of the 2010 year end value for RMD calculation. Having set up separate accounts before the end of this year, they can each use their own age as of the end of 2011 in determining their respective RMDs. The divisor used for the 2011 RMD is then reduced by 1.0 for each successive year.
I assume the beneficiary IRAs are properly titled showing the name of both the father and the daughter.
If the father had any basis from non deductible contributions, each daughter inherits half the remaining basis at his death and would file their own 8606 to calculate the taxable amount of their RMDs or other distributions.