RMD after death
Client DOB 6/6/1942, date of death 5/7/2014 so he was over age 71 and died just short of his age 72 birthday. Prior to his death he instructed his IRA provider NOT to distribute his RMD. His IRA provider (Prudential Annuity) says he instructed the company to “waive” his RMD. Following his death , the company split his IRA into to shares, one to each daughter on a 50/50 basis. Daughter A took her 50% share as a taxable lump sum distribution. Daughter B has moved her proceeds into a beneficiary IRA. Our question: it appears daughter B should take her portion of the RMD in this calendar year of 2014. Do you agree?
Permalink Submitted by Alan - IRA critic on Sat, 2014-09-20 00:12
Yes. The year of death RMD can be taken in any combination between the beneficiaries, so if A took 50% of decedent’s RMD, the other 50% is still outstanding and can be taken by either of the two. Sounds like A has taken her share, so B will have to take her share as well. It does not matter if the RMDs are taken before establishing separate accounts or after, but should be withdrawn before year end. In reality, if B transferred her share into a separate inherited IRA, the only beneficiary left on the decedent’s IRA is A so A now also has a separate inherited IRA account. Usually the IRA custodian will set up as separate inherited IRA at the time that either beneficiary takes a distribution, so it is surprising that A’s share has not also been tranferred to a new account number. How the IRAs are set up however does not change the RMD requirements for 2014. The remaining 50% share should be distributed before year end.
Permalink Submitted by David Mertz on Sat, 2014-09-20 00:28
If “Daughter A took her 50% share as a taxable lump sum distribution” was meant to say that Daughter A took a distribution of her entire interest in the decedent’s IRA, rather than just 50% of the decedent’s year-of-death RMD, the decedent’s entire year-of-death RMD has been satisfied by Daughter A’s distribution.
Permalink Submitted by Alan - IRA critic on Sat, 2014-09-20 00:59
Yes, it has. A’s total distribution more than satisfies the entire year of death RMD and therefore B does not need to take any distribution this year.