Inherited IRA – ESTATE
Kim has an Inherited IRA from her deceased mother, took RMD for 2016, has not taken RMD for 2017 yet…Kim died in November and “The Estate” is listed as beneficiary. Kim who died has a husband LEE. Lee is positioned to inherit this Inherited IRA through the “Estate.” Does LEE need to quickly open an Inherited IRA to take 2017 RMD? Or does he have until end of 2018?
Permalink Submitted by Alan - IRA critic on Fri, 2017-12-22 16:25
Considering the circumstances, it will take time for the estate to be established and for the inherited IRA to be assigned to Lee by the executor. The IRS knows this and will almost surely waive any penalty for being late with the 2017 RMD, although the estate would have to file a 5329 and state the reasonable cause for being late. The date of Kim’s death should be sufficient. To avoid the 5329, the RMD Kim needed to take could be distributed before year end to her estate and passed through to on a K 1 to Lee OR the distribution could be postponed until the estate assigns the IRA to Lee next year, but that would trigger the need for Form 5329. For 2018, Lee (or the estate) would continue Kim’s RMD schedule, subtracting 1.0 from the correct divisor Kim would have used for the 2017 RMD.