IRA distribution after RBD — year of death of IRA owner
Hi,
An IRA owner age 80 died in January 2016 before he was able to take his RMD. I believe his non-spouse beneficiary must take an RMD from the assets in their Inherited IRA in 2016 because the original IRA owner didn’t take his before he died (correct?) … but do we use the original IRA owner’s table to find the divisor in 2016, or the beneficiary’s single-life table to find the divisor in 2016?
Publication 590-B addresses this issue for the year AFTER the original owner died (use the beneficiary’s single life table) … but unless I missed it, I don’t see which table to use for the divisor in the year of the IRA owner’s death.
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2016-02-26 02:47
The 2016 RMD is the owner’s RMD calculated assuming the owner had lived. The beneficiary is responsible for completing that RMD, then next year the beneficiary’s own age as of 12/31/2017 is used to determine the initial divisor for 2017. For each year thereafter the divisor is reduced by 1.0. Note that the beneficiary is only responsible for completing the 2016 RMD of the owner, not any missed RMDs of the owner for years prior to 2016.
Permalink Submitted by chris erickson on Fri, 2016-02-26 14:49
Thank you. Follow up question. If there are two beneficiaries (50-50) split, and if one beneficiary takes an amount greater than what the original owner’s RMD was in his date of death, does the other beneficiary have to take an RMD during the year of death? Or must each beneficiary in this case take an RMD of at least 50% of the deceased’s amount? Thanks again!
Permalink Submitted by Alan - IRA critic on Fri, 2016-02-26 16:10
Yes, the year of death RMD can be satisfied in any proportion by multiple beneficiaries because it was the owner’s RMD. Therefore, the other beneficiary here does not have to take a distribution for the year of death, It also does not matter whether the date of death RMD is taken before or after separate inherited IRA accounts are created. Of course, in all following years each beneficiary must satisfy their own RMD.
Permalink Submitted by chris erickson on Fri, 2016-02-26 17:32
Thank you again.
Permalink Submitted by chris erickson on Fri, 2016-02-26 17:33
Thank you again.