When to take RMD

Submitted by Linda Blackwell on Thu, 2017-12-21 04:44

Clients are beneficiaries of father’s estate. Father divorced clients’ mother in several years ago, and remarried. Father and second wife were married at least 10 years. Fathers birth date is October 5, 1945; second wife’s birth date is April 6, 1959.

Second wife died October 15, 2016, at age 57. She left her (community property) IRA to husband. Husband died December 12, 2016, at age 71. His estate is still going through probate. Is the RMD based on wife’s age, or husband’s age?

Any thoughts are greatly appreciated. Thank you.



Submitted by David Mertz on Thu, 2017-12-21 05:33

RMDs are based on neither wife’s age nor husband’s age.  Did husband designate beneficiaries after inheriting his wife’s IRA?  If not, husband’s estate is the likely beneficiary under the IRA agreement; check the IRA agreement to confirm.  Even if husband did not make the election to treat the IRA as his own, husband became owner of the IRA under the special rule that automatically makes husband the owner if he passes before beneficiary RMDs from the IRA inherited from his spouse are required to begin (which would have been the year in which his wife would have reached age 70½).  If husband’s estate is the beneficiary (not an individual), the IRA must be distributed under the 5-year rule since husband died before his required beginning date for RMDs as owner.  (His RBD would have been April 1, 2017.)

Submitted by Linda Blackwell on Fri, 2017-12-22 21:18

Hello, and thank you so much for the information above. Wife’s Will left all her possession to her husband. Husband died two months later and it appears did nothing with the IRA, nor did he make election to treat the IRA as his own. the IRA passed to him while he was still alive. Now that he has passed, his beneficiaries want to disclaim the IRA. The nine month time has expired, and it appears that his estate must take a distribution before end of year. I understand you comment to state that Wife’s IRA passed to Husband, (as an individual), but since he died, the asset is now part of his estate. If his estate now owns the IRA, then it must take a distribution under the 5 year rule. Is that correct? 

Submitted by David Mertz on Fri, 2017-12-22 22:33

  • You are correct, it’s too late for the estate beneficiaries to execute qualified disclaimers.
  • Under the 5-year rule, the IRA must be fully distributed by the end of the fifth year following the year of the husband’s death (by the end of 2021).  However, it’s possible that the IRA agreement could dictate payout over a shorter period.
  • Instead of distributions being made from the IRA to the estate, the IRA can be divided and each separate portion of the IRA can be distributed intact as inherited IRAs to the estate beneficiaries, allowing each of the estate beneficiaries to decide when to make distributions (provided that all amounts are distributed from the inherited IRAs by the end of the 5th year following the year of death).  This would generally be favorable to keeping the estate open for 5 years to allow a gradual payout to the estate and subsequent distribution of the estate income to the estate beneficiaries.
  • IRA custodians often push to have an IRA inherited by an estate be fully distributed quickly so that they can be done with it, but immediate distribution is not required unless it’s stipulated for these circumstances in the IRA agreement.

Submitted by Linda Blackwell on Sat, 2017-12-23 03:13

The beneficiaries want to disclaim the IRA so that it can go to second wife’s son, (Husband is not the father of second wife’s son.) They just don’t want to suffer the tax consequences. Any thoughts?

Submitted by David Mertz on Sat, 2017-12-23 03:30

  • Disclaiming now is not an option.  The deadline for making a qualified disclaimer was September 12, 2017, nine months after the death of the husband.
  • The beneficiaries could gift some amount to the second wife’s son, but the beneficiaries (or the estate, but that usually doesn’t make sense) would still be responsible for the taxes.

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