Multiple IRA Beneficiary Distributions
My Client John Doe, had two IRA’s and recently passed away. IRA #1 had a calculated RMD for 2012 of $28k, of which while John Doe was alive, he took $25k, therefore remaining of $3k of the RMD. IRA #2 had a calculated RMD of $3k, of which $0 was distributed while he was alive. The beneficiaries were his two daughters. Each were entitled to 50% of each IRA. Daughter #1, decided to transfer both IRA #1 & IRA #2 and combine them into an inherited IRA for herself. Daughter #2 decided to transfer IRA #1 to an inherited IRA and take a full distribution on IRA #2 (bad move on her part as I told her). That being said there is a remaining RMD balance for 2012 of $3k each for IRA #1 & IRA #2. Now normally I would say each daughter should take 50% of the remaining RMD to satisfy for 2012, but since Daughter #2 took a full distribution on IRA #2, which was over $20k, would that satisfy the 2012 RMD for the deceased as a whole? Or should Daughter #1 take her 50% share of the RMD distribution? Am I clear about my explanation? Please advise. Thank you!
Alek
Permalink Submitted by Alan - IRA critic on Sat, 2013-09-14 02:51
Strangely enough, the IRS Regs only requires beneficiaries to complete the RMD for the year of owner’s death. There is no mention of prior years. It sounds like client passed in 2013, so it’s the 2013 unsatisfied RMD the beneficiaries must complete, not 2012. This 2013 RMD can be satified in any combination by the beneficiaries, therefore it is possible that the distribution by daughter #2 satisfied the RMD requirement. If not, the beneficiaries in any combination must complete the 2013 RMD, so this takes some coordination between the two. This flexibility only applies to the year of death.