RMD in year of death to Charity
I have a 93 year old that died last month before taking his 2011 RMD. His spouse predeceased him many years ago and his entire IRA is going to charity. Is he required to take a 2011 RMD and report as income in his tax return or can he satisfy the 2011 RMD by directing it to the charitable beneficiary before 12/31/11? The 2011 RMD will far exceed the $100,000 generally allowed to go to charity.
Permalink Submitted by Alan Spross on Mon, 2011-12-05 22:28
It seems strange, but there is no requirement that the RMD for the year of death be paid to anyone but the named beneficiary after the owner’s death, ie the charity. As such, it will not be taxable even though it would have been had the decedent taken out the RMD while living. The QCD is immaterial in this case since the charity can simply drain the entire IRA by year end and the 2011 RMD will be satisfied. This means that an IRA owner in poor health intending that the IRA proceeds go to a charitable beneficiary, should not rush to take out that final RMD until very late in the year.
The decedent’s final tax return does not have to mention the RMD because there was no obligation for the decedent to take that RMD before passing.
Permalink Submitted by Edward Wildman on Tue, 2011-12-06 15:16
I love the answer. Any support for your position would be appreciated..
Permalink Submitted by Alan Spross on Tue, 2011-12-06 16:45
I base the conclusion on the following IRS Reg 1.401(a)9-5, Q 4 copied below. Note final sentence:
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Q–4. For required minimum distributions during an employee’s lifetime, what is the applicable distribution period?
A–4. (a) General rule. Except as provided in paragraph (b) of this A–4, the applicable distribution period for required minimum distributions for distribution calendar years up to and including the distribution calendar year that includes the employee’s date of death is determined using the Uniform Lifetime Table in A–2 of §1.401(a)(9)-9 for the employee’s age as of the employee’s birthday in the relevant distribution calendar year. If an employee dies on or after the required beginning date, the distribution period applicable for calculating the amount that must be distributed during the distribution calendar year that includes the employee’s death is determined as if the employee had lived throughout that year. Thus, a minimum required distribution, determined as if the employee had lived throughout that year, is required for the year of the employee’s death and that amount must be distributed to a beneficiary to the extent it has not already been distributed to the employee.
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