RMD’s and Inherited IRA

Submitted by George Calvert on Wed, 2015-07-22 22:04

Hello:
I have a situation where the beneficiary of an IRA found out that the IRA owner had not been taking RMD’s. The IRA owner (mother) passed away in 2015 at age 75. There are 2 beneficiaries (children)each entitled to 50% of the IRA. The IRA owner (mother)never took any distrbutions. How do the beneficiaries handle the current year RMD and the prior year RMD’s? Are there any private letter rulings about taking the RMD’s after the IRA owner passes away and the beneficiaies being exempt from th 50% penalty?
Thanks



Submitted by Alan - IRA critic on Wed, 2015-07-22 22:22

  • IRS Regs only make the beneficiary responsible for the year of death RMD, if not completed. They have no responsibility for prior year RMD shortfalls of the owner. There is no evidence that the IRS ever pursues estates for any prior year 50% excess accumulation penalties, and no such action is indicated in any IRS guidance, . Obviously, this is a major gap in the RMD requirements and it is surprising that nothing has been done about it.
  • Therefore, the beneficiaries must only distribute the year of death RMD and it will reportable on their own tax returns.

Submitted by George Calvert on Thu, 2015-07-23 00:07

Thanks Alan!

Submitted by Lydia Greene on Thu, 2015-07-23 18:19

Thank you, I apprecite you assistance

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