RMD from a deceased person’s IRA
An individual aged 76 died in September of last year. She had a large IRA.
In the year of death, no RMD had been taken out when she passed.
Her 3 kids (adults) are the beneficiaries of her IRA. Without RMD being taken (for her) the fudns were moved to chihldren’s newly created beneficiary IRA’s.
Should the RMD be taken BEFORE the funds are moved to beneficiaries? If so, and if this creates the potential for the 50% penalty on RMD not being taken, what remedial actions are availalbe?
Permalink Submitted by Alan - IRA critic on Mon, 2013-01-07 22:24
It is all right if the separate accounts were created before satisfying the year of death RMD. If the 3 beneficiaries do not want to satisfy that RMD equally, they can take out the RMD in any combination they wish, eg just one beneficiary could take out the entire amount. Form 5329 should be filed by beneficiaries who completed the RMD requesting that the penalty be waived for “reasonable cause” and explain that the RMD has now been satisfied and the amount. This happens frequently and the IRS will waive the penalty.