Combining RMDs

Submitted by S Baukol on Mon, 2015-01-26 20:09

We have a client that has an 15,000 RMD for their regular IRA for 2014 and a 65,000 RMD for an inherited IRA for 2014. We combined the two and did an 80,000 from inherited IRA in 2014. The client will be 72 years old in March of 2015. Is this correct? If not what is the solution to correct this? It has been more than 60 days since the distribution was done. Thank you.

Also this is a spousal inherited IRA if that makes any difference..

Thank you



Submitted by Alan - IRA critic on Mon, 2015-01-26 23:07

It was NOT correct, assuming this was a non spouse inherited IRA. The inherited IRA RMD must be satisfied entirely separate from the owned IRA, both the calculation and the distribution. The additional 15k inherited IRA distribution cannot be rolled over, so the only solution to this is to take 15k out of the owned IRA ASAP, then file a 5329 with the 2014 return requesting a penalty waiver. The IRS will probably not deny the waiver based on the explanation of why this happened with the 5329. The additional income on the  15k distribution will go on the 2015 return, so there will be no additional taxes due on the 2014 return.



Submitted by S Baukol on Mon, 2015-01-26 23:14

This was a spousal inherited IRA.  Does this change anything??? Thank you



Submitted by Robert Meyer on Mon, 2015-01-26 23:21

Did the spousal beneficiary elect to treat the inherited IRA as their own? Or did they elect to remain as beneficiary on the account?If the inherited IRA was rolled into the spousal beneficiary’s IRA (treated as own), the $80K “combined” RMD taken in 2014 may have been acceptable. Otherwise, Alan-iracritic’s response sums up the situation. 



Submitted by Alan - IRA critic on Mon, 2015-01-26 23:36

  • It might. Several factors come into play here, and need more info. Was the distribution done in the last 60 days? What year did spouse pass, and what would have been the age of the deceased spouse on 12/31 of the year of death? Was client the sole beneficiary of the IRA, and is this the only inherited IRA they have from spouse?
  • Client should have rolled over the inherited IRA to their own before this and should do so ASAP. This will reduce RMDs on the owned IRA and will preserve the stretch for client’s beneficiary. For the inherited IRA, there is a default rule that if a sole beneficiary surviving spouse FAILS to take the full RMD as beneficiary, they default to ownership status. So in conjuction with the other info, it may be worthwhile to check to see if client fell short of the inherited RMD in a prior year. Of course, what was done in 2014 will not result in being short on the inherited IRA (took more than needed), but perhaps it was done differently in 2013 or before.


Submitted by S Baukol on Mon, 2015-01-26 23:46

Distribution was not done in last 60.   Spouse passed in 2011 and would have been 68 years old.  The client was not the sold beneficary as the husband named the living trust as the beneficiary.  This was the only inherited IRA that they have from the spouse’s IRA funds.  Clients attorney said that she had to roll funds into the living trust and take single life rmd’s.  Client is current on RMD’s with the exception of this example we are talking about. 



Submitted by S Baukol on Mon, 2015-01-26 23:39

The husband named the Trust as the beneficiary of the IRA.  The spousal money went into the IRA bda trust.  This would make it seperate for sure correct and Alan-iracritic’s response would apply correct? thank you



Submitted by Alan - IRA critic on Tue, 2015-01-27 01:13

If the trust was considered qualified for look through treatment, the RMDs would be based on the oldest trust beneficiary. But none of this will resolve the omitted RMD on the owned IRA, so my first post would apply and the 15k needs to be taken out of the owned IRA in order for the owned RMD to be made up, and penalty waiver on Form 5329 requested.



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