RMD after death
Hoping I can get some advice here. My dad passed away in August 2012 at the age of 72. From what I can tell he did not take any RMD for 2012 yet. His wife is 69. I’m trying to get her accounts in order.
We took death certificate to first custodian and they created new IRA account under her name and transferred dad’s trad IRA funds into her new IRA account. From what I can tell, they did not take a RMD from the balance. Is this a problem?
Can mom simply take RMD for 2012 from her new account or does the RMD need to be distributed from Dad’s original account. I am unclear who’s ss# the distribution is reported to. I imagine she will file married joint 2012 taxes, so is this even an issue?
A different custodian on another trad IRA account is making her take RMD before they transfer funds into her existing trad IRA account. I don’t believe the money has transferred yet. Hoping we have time to take a larger RMD if necessary to cover the lack of RMD from the first account.
If it is necessary to take RMD prior to transferring funds into mom’s trad IRA account, can she take a larger RMD from the second account in order to cover the lack of RMD from the first account, providing it meets the necessary total RMD for both accounts? Should we have the first custodian transfer funds back into dad’s original IRA, take RMD and then transfer to mom’s new account?
thanks for the help.
Permalink Submitted by Alan Spross on Fri, 2012-09-14 20:31
Sorry to hear of your loss.
The IRS is not particular about which account the year of death RMD is distributed from, since it will be reported under the beneficiary SSN either way. In addition, the RMD can be aggregated in any combination from the inherited IRA accounts.
So you have some flexibility here. You can either have the total RMD taken from the second account, or just the RMD for that account and take the rest from the IRA that was rolled over to her name as owner.
The funds could not have been transferred back to the inherited account anyway. Once an IRA is owned it can never return to inherited status.
Permalink Submitted by Bob Smith on Fri, 2012-09-14 22:00
Thanks for the explanation.
Sounds like no reason to worry that a RMD was not distributed prior to transferring the funds into her new IRA account. She can request a RMD from her new account if needed to satisfy 2012 RMD requirements.
It just worried me that the first custodian didn’t mention anything about taking RMD prior to transferring, but the second custodian did. The first custodian set up a new trad IRA account for my mom, but she already had an existing trad IRA with the second custodian. Maybe that’s why the second custodian mentioned taking RMD prior to transferring funds.
Permalink Submitted by Alan Spross on Fri, 2012-09-14 22:46
I don’t think it’s possible to determine the reason for the difference other than the IRS has not issued specific regs regarding the custodian’s duties to distribute RMDs for inherited IRA accounts. Therefore, institutions have developed differing internal procedures with respect to RMD administration. The second custodian probably wants to deflect any criticism for non having pointed out the year of death RMD requirement and insisting on distributing the RMD will eliminate that issue.