RMD for Inherited IRA with Multiple Beneficiaries making different elections
My client died in 2016 before taking her 2016 RMD and named her 6 grandchildren as beneficiaries. Two of the grandchildren are electing to take a lump sum taxable distributions of their 1/6 shares. Since this represents 1/3 of the IRA these two distributions are more than the decedent’s 2016 RMD amount. The other 4 grandchildren have elected to directly transfer their 1/6 shares to inherited IRAs. Do the remaining 4 grandchildren still need to satisfy their own 1/6 share of the RMD or is the full RMD looked at on an aggregate basis and satisfied by the two lump sum payments?
Permalink Submitted by Alan - IRA critic on Wed, 2016-03-02 18:03
The year of death RMD can be satisfied in any combination between the beneficiaries since it is not a beneficiary RMD, but the decedent’s final RMD. Therefore, the 4 grandchildren do not have to take a 2016 RMD, and their first beneficiary RMDs will be for 2017, and must be distributed by 12/31/2017.