Beneficiary RMD

Submitted by Wendy Mommaerts on Fri, 2017-08-04 14:45

Client passed away 4/1/2017 at the age of 95 leaving her IRA to her four kids. Deceased has not satisfied her 2017 RMD.

One of the beneficiaries will be withdrawing 100% of his/her share of the deceased IRA.

Do each of the four beneficiaries have to take 1/4th of the deceased 2017 RMD or can this be satisfied by the one who is withdrawing 100% of their account?



Submitted by Alan - IRA critic on Fri, 2017-08-04 17:15

The first distributions taken from the IRA regardless of payee are credited against the year of death RMD. Therefore, the beneficiary taking a lump sum distribution will satisfy the RMD and the others need not take any distributions for the year of death.

Submitted by Wendy Mommaerts on Fri, 2017-08-04 17:35

Just a clarification…the account of the deceased was already split into four beneficiary IRA’s and the one beneficiary will be withdrawing 100% of his inherited amount after the inherited amount was transferred over.  Is this still correct that as long as one of the four beneficiaries takes out the RMD amount or more, this will satisfy the deceased 2017 RMD for all beneficiaries.

Submitted by Alan - IRA critic on Fri, 2017-08-04 18:25

  • Yes, this is still correct. Most beneficiary distributions are not done until the separate account or accounts have been created since most custodians do not want to provide separate accounting within the actual IRA account inherited and then have to keep different balances for each share when distributions differ. But this is stlll the year of death RMD even though it comes from one of the separate accounts. 
  • For example, with 4 children you usually have at least one that is late to return the documentation. The ones that want distributions ASAP will usually be the first. The child wanting the lump sum may therefore be the first to set up a separate account and it will contain 25% of the balance when the transfer is made. The next child will then receive 33.33% of the remaining balance once they establish their account, the next child 50% of the amount remaining etc. 
  • Some coordination and communication is often required in this situation, but a distribution of 25% will easily complete the year of death RMD even though decedent was 95. That beneficiary should complete the distribution before year end to avoid having to file a 5329 to request a penalty waiver if the distribution is not done by year end.

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