RMD Withdrawal after Death
If I die before taking out the remaining RMD of $50,000, should my two kids who inherit the traditional IRA withdraw the $50,000 from my IRA after my death or should they split my IRA into two inherited IRAs and withdraw $25,000 from each of the split inherited IRAs?
Permalink Submitted by Alan Spross on Thu, 2011-09-29 01:25
Hopefully, that won’t happen.
But if it does, the order in which they create separate accounts and take the rest of your RMD does not matter in most cases. One advantage of taking the RMD first is that both beneficiaries will know for sure that the RMD in total has been distributed.
However, the RMD can be satisfied by either beneficiary. All the IRS cares about is that the 50 is distributed and reported on their returns, but they don’t care whose return. If one beneficiary needs the money anyway, they can take the full RMD and the other beneficiary will then have more to stretch over their life expectancy.
How well these two communicate and execute is also a factor since each needs to know that the RMD has been completed, even if it does not get done until the year after your death. If not completed in the year of your death, they need to file a 5329 to get the penalty waived for the delay, but this is commonplace especially with deaths occurring late in the year.