RMD for inherited IRA
IF 77 year old IRA owner dies and has named sons as beneficiary, do sons have to take RMD’s from inherited IRA based on their age or do they have to continue taking RMD’s based on deceased IRA owners age?
IF 77 year old IRA owner dies and has named sons as beneficiary, do sons have to take RMD’s from inherited IRA based on their age or do they have to continue taking RMD’s based on deceased IRA owners age?
Permalink Submitted by Alan - IRA critic on Sun, 2013-02-17 17:46
The named beneficiaries can take RMDs based on their own age attained as of 12/31 of the year following the father’s death. By that same date, they need to have established separate inherited IRA accounts in order for each to use their own life expectancy. If they don’t create the separate account, they both must use the age of the oldest beneficiary. For the year the father passes, if he did not complete his RMD, the beneficiaries must take out the balance of his RMD by the end of the year of death. That RMD would be taxable to the beneficiaries.
Permalink Submitted by Don Warnke on Sun, 2013-02-17 20:35
thanks, I was thinking that I had read at some point that if the IRA owner was beyond age 70.5 and taking RMD then the beneficiarys had to continue the RMD based on Original owners age. Thanks again.
Permalink Submitted by Alan - IRA critic on Sun, 2013-02-17 22:05
That’s true if there is no designated beneficiary (eg estate), and is also an option in those rare cases where the designated beneficiary is older than the IRA owner. Neither of those cases applies here.
Permalink Submitted by Kenny Kittrell on Mon, 2013-02-18 18:03
If you have TIRA owner that dies at age 50, will the non-spouse inherited TIRA beneficiary be able to let the TIRA grow without taking RMD’s until the time the owner would have turned 70.5?
Permalink Submitted by Kenny Kittrell on Mon, 2013-02-18 18:18
I have a client couple that resides in Texas which is a community property state, they have been married for 20 years, the husband’s company went out of business so he transferred his company’s 401K over to his IRA. Do IRA’s offer any protection from his wife getting half of his IRA if she files for a divorce? If not, would his wife be able to rollover her half of the IRA to her own IRA? What if the husband had already started receiving RMD’s for the year of divorce, can she also get half of his RMD? Thank you
Permalink Submitted by mk foss on Mon, 2013-02-18 18:25
A spouse or former spouse is not considered a creditor for retirement plan purposes. Thus, they can receive a portion of a retirement plan that a creditor could not touch. Whether she can get half of his IRA or half of his RMD depends on your local domestic relations law. Generally divorce settlements are negotiated and are not strictly one-half of each asset in a community property state.
Permalink Submitted by Alan - IRA critic on Mon, 2013-02-18 18:54
With respect to your earlier question, a non spouse beneficiary cannot defer life expectancy RMDs until decedent would have reached 70.5. Only a sole spousal beneficiary can do that. A non spouse beneficiary can use the 5 year rule if decedent passed prior to RBD if there is any benefit to eliminating RMDs for the first few years in exchange for draining the account at the end of the 5 year period.