RMD
Does anyone know if spouse passes away 11.2014 and RMD was taken out for 2014, however the surviving spouse wasn’t aware that deceased spouse put his RMD on automatic withdrawals, then in 2015 his RMD came out electronically from IRA to bank account: Can the surviving spouse “put” back the RMD as if it never happened? (taxes were withheld) She doesn’t want nor need the RMD income and isn’t sure how to file 2015 taxes since his RMD came out under his social security. She asked the custodian of the IRA – they said she cannot “roll” back the RMD to IRA (which is now her IRA). Thank you for your time.
Permalink Submitted by Alan - IRA critic on Mon, 2015-05-04 18:37
Does she have her own RMD for 2015, since she should now be treated as owning the IRA for the entire year. Is bank account joint? A decedent’s tax return will probably have to be filed for 2015 to recover the withholding under decedent’s SSN, although this question should be addressed to a CPA, before determining if an effort should be made to have the distributions reported to the surviving spouse. As for rollovers, only one distribution can be rolled over per taxpayer IRAs, so if these were monthly, probably no benefit of even pursuing rollovers. I would elevate this discussion with senior staff of the custodian, because all actions depend on what that custodian is willing to do. Perhaps a tax attorney should be retained to discuss with the custodian and the IRS. The withholding in particular creates a real mess here.
Permalink Submitted by Rubina Hossain on Mon, 2015-05-04 20:22
Thank you for the response – actually forgot to add that point – good question – no she doesn’t have her own RMD for 2015 – I’m trying to find out about the bank account – it was a one time distribution – I spoke to the custodian separately and was told something different: they said they would rollover back to IRA the RMD and have her hire a tax advisor to be able to explain what happened…
Permalink Submitted by Alan - IRA critic on Mon, 2015-05-04 22:02
The best solution would be for them to accept a check in repayment of the gross distributions and then not report the post death distributions at all. That would eliminate the rollover problem, although the withholding would still have to be recovered from the IRS unless the custodian has a way to recover that as well without a tax filing.
Permalink Submitted by Rubina Hossain on Tue, 2015-05-05 17:31
Thank you – just found out the RMD was deposited into Joint account…
Permalink Submitted by Rubina Hossain on Tue, 2015-05-05 17:33
Thank you – just found out the RMD was deposited into Joint account..
Permalink Submitted by Rubina Hossain on Tue, 2015-05-05 17:35
Thank you for your response – the RMD was deposited into a joint account
Permalink Submitted by Alan - IRA critic on Wed, 2015-05-06 20:49
Since these distributions took place in 2015 and therefore have not been reported by the custodian, they should be asked to accept a check to return the funds to the IRA since the decedent’s instructions were void upon his date of death. This would not be a rollback, instead would be a reversal of a distribution that was no longer authorized due to the death of the IRA owner.
Permalink Submitted by Rubina Hossain on Wed, 2015-05-13 15:54
Thank you – very good point
Permalink Submitted by Rubina Hossain on Mon, 2015-06-01 14:54
The client went back to investement firm – Investment firm now says could have used the 60 day rule – to put back deceased husband’s RMD – 60 day rule doesn’t seem should apply in this case?
Permalink Submitted by Alan - IRA critic on Mon, 2015-06-01 17:39
Right. The distributions were not authorized after the DOD and therefore should not be subject to a 60 day rollover period. The custodian should accept a check from the surviving spouse and not report the distribution at all. Since none of these 2015 distributions have been reported to the IRS yet, it should be a simple process for the custodian to accept the funds back into the IRA. Unfortuneately, there are no IRS Regs addressing this situation.