One of five beneficiaries wants to take complete distribution
Five beneficiaries will be inheriting an IRA from their father (age 94) who passed 2.13.2013.As I understand the process, the RMD for 2013 will be passed to each beneficiary.
One of the five beneficiaries expressed the desire not to take the annual RMD. The beneficiary would like to take their full distribution in 2013. If a single beneficiary decides to take their full distribution, are the remaining four beneficiaries required to do the same?
Permalink Submitted by Alan - IRA critic on Mon, 2013-03-25 02:13
No, they can still create separate inherited IRA accounts and take RMDs based on their individual life expectancy. However, the 2013 RMD is the father’s RMD to the extent he did not complete it before passing. For the 2013 RMD, the beneficiaries can take it in any combination and if one beneficiary wants to distribute his entire interest, it will satisfy the 2013 RMD in total and the others do not have to take an RMD in 2013. Of course, this will take some coordination and communication between the beneficiaries with respect to the 2013 RMD remaining and creating separate beneficiary IRA accounts.
Permalink Submitted by PAUL HAGGERTY on Mon, 2013-03-25 17:28
The father did not receive a distribution before death. Therefore the estate will report his RMD on a 1041 for 2013. Is this correct?Assume the single beneficiary mentioned before does not take a full distribution. This said, the remaining five beneficiaries will have the custodian set up an inherited IRA account for each beneficiary which they will take a distribution based on their life expectancies.In this case, the father has a lot of land with a home but not a lot of savings. They nead cash flow to cover the expenses of holding and maintaining the property until it is sold. If the beneficiaries wanted to fund cash flow needed to cover the propery operating expenses using each of their share of the inherited IRa-would each beneficiary have to disclaim their IRA over to the decesed estate?
Permalink Submitted by mk foss on Mon, 2013-03-25 17:53
If the IRA owner did not take a distribution in the year of death, the beneficiries must do it. If the five were named as beneficiaries individually, the withdrawal of 1/5 by a beneficiary will count toward the fther’s RMD requirement. The only time there would be reporting on Form 1041 for the estate is if the estate was the named beneficiary. If the five are separately named they just have to insure that between the 5 of them, the father’s entire 2013 RMD has been withdrawn.
Permalink Submitted by ARNOLD KAMINER on Thu, 2016-05-05 17:18
He had an annuity and a brokerage account.The annuity company distributed both the entire RMD and one beneficiary took his share in a taxable lump sum.Will the entire taxable amount distributed count toward the total IRA RMD for both accounts? If yes, then can the beneficiaries split the remaining RMD amongst themselves?
Permalink Submitted by ARNOLD KAMINER on Thu, 2016-05-05 17:24
Is there a penalty for a withdrawal in excess of RMD if under age 59 1/2
Permalink Submitted by ARNOLD KAMINER on Thu, 2016-05-05 17:40
One Table is for “Distribution Period” and another is “Life Expectancy”Is “Distribution” for owner IRA and “LE” for Beneficiary?What are the rules?
Permalink Submitted by Alan - IRA critic on Thu, 2016-05-05 18:04
For all practical purposes treat the table divisors as reflecting the actual RMD distribution period. Table III divisors are based on a joint life expectancy of the IRA owner and a beneficiary 10 years younger. Table I only reflects the life expectancy of one individual. There is no penalty for taking out more than the RMD in any year, however a larger distribution means more taxable income. With respect to the 3 beneficiaries, if one took a lump sum that will be more than enough to satisfy the 2016 RMD for the father. Unfortunately, the other 2 cannot roll their distributions back into the inherited IRA because distributions to a non spouse beneficiary can never be rolled over. This should have been taken up with the IRA custodian at the time the first distributions were requested.