Inherited IRA Questions
Good Morning
I would appreciate assistance with the following scenario:
Facts:
Acount owner (> 70.5) passed away in 2010 leaving the IRA to her daughter
Daughter established an inherited IRA and began taking RMDs based on her life expectancy
January 2012 daughter passed away (prior to taking her 2012 RMD) leaving the IRA to her spouse
Questions:
Please confirm
Life excpectancy (reduce by 1 method) of the daughter is used to calulate the 2012 RMD
Who is responsible for the 2012 RMD and how is it reported to the IRS?
Surviving spouse can set up an inherited IRA under his social and continues use the life expectancy of the decease spouse (i.e. continue the reduce by one formula)
How is the new inherited IRA titled? Does the registration include the original account owner, mom, or the deceased daughter?
Thank you in advance
Brina.
Permalink Submitted by Alan Spross on Fri, 2012-02-24 16:59
The RMD divisors that the daughter would have used must continue for 2012 and subsequent years. The 2012 RMD is the responsibility of the daughter’s successor beneficiary if the daughter did not satisfy the RMD herself. The 1099R will be issued to whoever received distributions and will show the SSN of the recipient, therefore the recipient will report the income on their own 1040.
The IRA will probably have to be titled according to the system requirements of the IRA custodian, and some of these systems may not fully accomodate accounts passing to second or later beneficiaries. If the system will only accomodate two names, the two would be the original owner and the current beneficiary. If the system can accomodate all 3, the wording should include something similar to this:
“James Smith as successor beneficiary of Jean Smith, deceased, beneficiary of Sharon Davidson”.