RMD in year of death over 70 1/2 trust is beneficiary
A trust is the beneficiary of an individual IRA. The individual who died in 2016 did not take the RMD before death. The IRA’s custodian will not allow the trustee to have access to the account until the assets have been retitled in the trust’s name as an inherited IRA. Is there any way to take the RMD without having the full amount of the retitled IRA become taxable in 2016?
Permalink Submitted by Alan - IRA critic on Fri, 2016-12-02 19:31
The inherited IRA must be retitled to the beneficiary of that IRA (the trust) before any changes or distributions can be made from that IRA. That includes the year of death RMD. However, there is no reason the entire IRA would be taxable, just the RMD or other distributions the trustee of the trust requests. The trust can continue to take life expectancy RMDs based on the oldest beneficiary of the trust if the trust is qualified for look through treatment. Even if the trust does not qualify, that does not mean a lump sum distribution must take place.