RMDs post death with muliple IRAs
Scenario: Beneficiary receives two IRAs from owner (past RBD) who passed away (IRAs at two different custodians). The trust was named as a beneficiary for both IRAs. Custodian “A” allowed the beneficiary to set up a beneficiary IRA while Custodian “B” did not, and the beneficiary cashed in the IRA (which was much larger than the IRA at Custodian “A”). The question is does the cashing in of IRA “B” qualify as an RMD so that the beneficiary would not have to take an RMD from Custodian “A”? Or is cashing in an IRA payable to a trust a different thing than taking an RMD?
Thanks in advance for your input.
Permalink Submitted by Alan - IRA critic on Tue, 2015-09-01 18:08
There is no reason for custodian B to deny establishing a beneficiary IRA for the trust unless the trustee did not provide the required paperwork including a copy of the death certificate. Since B released a distribution, that distribution cannot be rolled over. However, since both IRAs were inherited from the same decedent by the same trust, the taxable distribution will satisfy the RMD for both IRA accounts and it will also satisfy the decedent’s year of death RMD if the decedent did not complete it. Distribution from an IRA to the trustee of the trust will apply against RMDs due from either IRA since the trust was beneficiary of both IRAs. NOTE: Distributions should not be paid to the beneficiary of the trust unless the trustee has assinged the IRA to the trust beneficiaries first.