Beneficiary predeceases IRA owner
Mom died earlier this year at 89 yrs old. Named step-dad as beneficiary but he predeceased her and there were no contingent beneficiaries. So the estate is beneficiary and custodian says IRA assets will be split between Mom’s two adult children, per the will. Two beneficiary IRA accounts will be created. But Mom’s RMD must be taken for this year. So is the RMD taken before the IRA is split and the distribution is taxed to the estate?
Permalink Submitted by Alan - IRA critic on Wed, 2015-07-22 20:20
The year of death RMD can be taken either by the estate before the IRA is assigned to the beneficiaries or after the assignment to the beneficiaries directly. The latter will allow that RMD to be taken in any combination by the beneficiaries, and avoids passing the RMD through the estate. The IRS does not care as long as the RMD is completed. Note that the children’s RMDs in year following the year of death must be based on the remaining life expectancy of Mom (Table I divisor on the age she would have attained in 2015 less 1.0 for the 2016 beneficiary RMD etc).
Permalink Submitted by Linda Taylor on Wed, 2015-07-22 20:43
Thank you so much! That definitely answers the question and I really appreciate your help.