Deceased RMD
If a client is over 70 1/2 and passed away and did not take their RMD in the year they passed. There are 3 non-spouse beneficiaries, if the RMD is not satisfied which one of the beneficiaries would have to deal with the tax implications? The oldest? Does the IRS provide any guidance in this case? Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2018-05-07 20:40
The year of death RMD can be satisfied in any combination from the 3 beneficiaries. Often, there is one that wants to take out more than the others, perhaps enough to complete the full year of death RMD. Each beneficiary is taxed on the amount they actually receive. Of course, in many cases they equally split the remaining year of death RMD, and that makes accounting easier for the custodian if separate inherited IRA accounts for each beneficiary have not been created. The year of death RMD can be completed anytime by the end of that year. FInally, note that a year of death RMD is required only if the owner passed on or after the required beginning date, not age 70.5. On average, the RBD is 4/1 of the year following the year the owner reaches 70.5, so on average the RBD is 9 months after actually reaching 70.5.