rmd the year after death
Hi,
Client died in Dec 2016. RMD for 2016 had already been taken. Now we are starting the process to move the money to inherited IRAs for her beneficiaries. Since we are into 2017, do we have to take an RMD from the account, payable to the estate of the deceased, before we fund the inherited IRAs?
Permalink Submitted by Alan - IRA critic on Mon, 2017-02-06 22:20
The estate was the named beneficiary? The answer is you don’t have to take the RMD before doing the transfers either way, but beneficiary RMDs will be much higher than if they were individually named.
Permalink Submitted by Richard Stumpf on Mon, 2017-02-06 23:16
no, we have individual beneficiaries named, the question was do we have to take a 2017 RMD before moving money to them.
Permalink Submitted by Alan - IRA critic on Tue, 2017-02-07 00:25
No. The separate inherited IRA accounts can be created by direct transfer and then each beneficiary will have to satisfy their own RMD for 2017 from their inherited IRA. Each beneficiary has until 12/31/2017 to complete their 2017 RMD. Any reportable distribution from these accounts will apply toward the RMD, but a direct transfer to create the accounts is not a distribution and is not reportable.
Permalink Submitted by Robert Gibb on Wed, 2017-02-08 20:21
What value would each beneficary use to calculate his/her 2017 RMD? Would it be based on the deceased’s December 31, 2016 IRA account balance since the account wasn’t transferred to beneficiaries until 2017?
Permalink Submitted by Alan - IRA critic on Wed, 2017-02-08 20:47
Yes, each beneficiary would use their pro rated share of the 12/31/2016 balance. Changes in value of the account after 12/31/2016 and the date the separate accounts are established are immaterial.