RMD 1 yr after death, but not yet inherited
A client passed away in summer 2016. He was 80 years old with no spouse. He took his 2016 RMD in January, 2016, while he was still alive.
Now it is 2017 and the IRA is still in his name; it has not yet been inherited. But it will be inherited very soon. Who will have to take the 2017 RMD’s? Can the heirs take it from their inherited IRA’s after it is inherited? Or must the RMD be taken before the IRA is split up?
Now, how does the answer change if non-person entities as inheritors?
Permalink Submitted by Alan - IRA critic on Fri, 2017-01-13 22:51
Each designated beneficiary or each non individual beneficiary must take their 2017 beneficiary RMD in 2017. No distribution is allowed from the owner’s IRA until it is retitled in beneficiary form, and almost all custodians will create a separate inherited IRA from which to make the RMD distributions for either the year of death or for the beneficiary RMD in following years. If the IRA goes to an estate, the RMD can either be paid to the estate or if the estate assigns the IRA to the estate beneficiaries before the beneficiary RMD year ends, the RMD can be distributed directly to the separate inherited IRAs of the estate beneficiaries. The separate account rules do not apply to estates or trusts in calculating each beneficiary’s RMD.