RMD for year of death

Submitted by Arthur Dicker on Thu, 2015-10-08 19:15

IRA owner died in January 2015. His estate is the beneficiary of the IRA. Does the executor have to withdraw an RMD for 2015 based on 2014 year-end value.
Attorney for executor is telling us no RMD is required since the entire IRA is going to the estate. What if the IRA is not distributed to the estate by 12/31/2015?
If RMD is required by year-end, I need code and regs to cite to the attorney.
Thank you in advance,
Art Dicker



Submitted by Alan - IRA critic on Thu, 2015-10-08 19:41

If the entire balance will be distributed to the estate before year end, the RMD will be satisfied. Or perhaps the executor will assign the inherited IRA to the beneficiaries of the estate who could get a limited stretch period. But the year of death RMD for the decedent is due as a minimum by 12/31/2015. The following is copied from IRS Reg 1.401(a)(9) -5   Q/A 4:

If an employee dies on or after the required beginning date, the distribution period applicable for calculating the amount that must be distributed during the distribution calendar year that includes the employee’s death is determined as if the employee had lived throughout that year. Thus, a minimum required distribution, determined as if the employee had lived throughout that year, is required for the year of the employee’s death and that amount must be distributed to a beneficiary to the extent it has not already been distributed to the employee.

Submitted by Arthur Dicker on Thu, 2015-10-08 19:49

Thank you, Alan.

Submitted by [email protected] on Mon, 2015-10-12 13:54

Alan, please clarify for me, as this comes up a bit and I’m confused.  Everything says that if he “dies on or after the required beginning date…”.  I understand there is only one RBD, which is April 1 in the year after reaching 70 1/2.  So, if he dies prior to that day, even though he was 70.5 when he died, there would be no RMD, correct?  example – is 70.5 in 2015, dies in 2015, no RMD.  Dies in Feb. 2016, no RMD for 2015.  Dies April 15th, 2016 RMD for 2015 was due on the 1st and RMD for 2016 is due by year end.  Is this correct? – m

Submitted by Alan - IRA critic on Mon, 2015-10-12 19:30

  • All this can be confusing, and is probably more convoluted than you thought. You are correct that death prior to the RBD will not trigger a year of death RMD or an RMD for the year prior to that when taxpayer might have been 70.5. The result is that death eliminates certain RMDs that would have been required of a living person doing a rollover in one of those RMD distribution years.
  • Therefore, your first question is correct – death in 2015, no RMD for 2015. This one is pretty obvious.
  • Not so obvious is the death in Feb, 2016, still prior to the RBD. There is no year of death RMD for 2016 either in this case (Ref 590-B, p 8). Therefore, deaths IN the RBD year but prior to the actual RBD result in up to 2 YEARS of RMDs being eliminated.
  • For deaths on 4/1/2016 or later, the RMD requirement switches over from prior to RBD to “on or after RBD”. The quote posted above applies in this case with the beneficiary responsible for the 2016 year of death RMD. But what about the 2015 RMD that the decedent should have distributed by 4/1/2016?  Nothing will come of it because the beneficiary is only responsible for the year of death RMD (2016), not any prior years. And I have never heard of a case where the IRS assessed a penalty against the estate for any RMD shortfalls from the past. If the IRS had the intent to bring all RMDs current, the only practical solution would be to require the beneficiary to make up these RMDs, but there are no Regs that require this other than the quoted provision above that ONLY addresses the year of death RMD. Therefore, beneficiary will have to complete the 2016 RMD by 12/31/2016 and the 2015 RMD if not taken falls through the cracks.

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