Inherited IRA, RMD and Lump Sum
Good afternoon:
Call from an estate planning atty.
Client’s father passed away. Father was 70+ and taking RMD’s.
Client is mid 30’s and sole bene.
Father had 2 IRA’s. One at Vanguard and the other at Chase.
RMD’s were coming from the Vanguard acct.
Client is opening Inherited IRA at Vanguard and will continue RMD’s.
In future years if Client chooses to take a withdrawal larger than the RMD is there any penalty for the amount over the RMD amount? (10%).
If the Client takes a lump sum from the Chase is there penalty as well??
Thanks in advance.
Permalink Submitted by Alan - IRA critic on Thu, 2014-09-11 22:52
The is no penalty for taking more than the RMD, only for taking out less. Since client inherited IRAs from same decedent, client could combine the two inherited IRAs or could keep them separate and satisfy the total RMDs from just one of the inherited IRAs. If father had not completed the year of death RMD, client must also complete that RMD, and it should be done before the end of the year of death. If not done by that date, it should be withdrawn ASAP thereafter and a 5329 filed to request a penalty waiver. Whether father had been taking his RMDs from just one account or not does not affect the client’s options.
Permalink Submitted by Geoffrey Kasher on Thu, 2014-09-11 23:18
i appreciate it