Inherited IRA’s – RMD’s for 20176
Client died on 5/12/16 leaving 4 non-spouse beneficiaries on his IRA – the children. (Note: client completed his RMD before he died). The account has been split 4 ways and moved into individual inherited IRA’s. Question: Is the 2017 RMD calculated for each beneficiary based on the oldest child’s age? Oldest child is 54 this year – would the distribution period be 30.5 for each of the beneficiaries? (Using the single life expectancy table for inherited IRA’s). Thank you for your time.
Permalink Submitted by Sandra Owens on Mon, 2017-03-20 14:12
Topic should be Inherited IRA’s – RMD for 2017
Permalink Submitted by Alan - IRA critic on Mon, 2017-03-20 15:42
Since separate inherited IRA accounts were created by the deadline, each child can use their own life expectancy for their 2017 beneficiary RMDs. Only the oldest one will use 30.5. The RMD is calculated using 25% of the 12/31/2016 balance if the separate accounts were not created until this year. Otherwise, they each use their own 12/31/2016 account balance. For each year after 2017, the divisor used in 2017 is reduced by 1.0 so there is no need to re check Table I after 2017.
Permalink Submitted by Mike Cacicedo on Wed, 2017-03-22 13:53
What if the IRA holder did not take the required RMD for 2017 before he died?
Permalink Submitted by Alan - IRA critic on Wed, 2017-03-22 16:05
Had IRA owner not completed his year of death RMD, the beneficiaries are jointly responsible for completing it. Quite often this cannot be done for late year deaths and then the year of death RMD must be completed ASAP in the following year and Form 5329 filed by the beneficiaries to request a penalty waiver. Completing the year of death RMD in any combination of the beneficiaries means that each one does not have to take out their pro rata share. Sometimes one beneficiary will take a lump sum distribution that entirely satisfies the year of death RMD amount. Finally, the year of death RMD can be taken out either before or after the separate accounts are created.