State University Retirement System SURS, Beneficiary IRA, RMD calculations.
Son 77 dies while working in May 2018 , has 1mm Pension @ SURS. Has NOT drawn on it. Mother is Beneficiary, age 96.
Rollover to Beneficial IRA performed. RMDS need to be calculated and distributed. SURS claims they cannot give a value of the account on 12/31/2017. How does one determine the RMDs?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2018-08-08 19:31
Son passed prior to his required beginning date, so there is no RMD required for 2018. It is not clear whether that is the reason the plan cannot provide the value at any year end, perhaps they stated this because there is no RMD due that is determined by that value. If son had retired earlier and his death had occurred after the RBD, then mother’s RMDs could have been based on son’s remaining life expectancy. But since he passed prior to his RBD, mother’s own age must be used and her RMDs will be very large. Her first RMD will be for 2019, based on 12/31/2018 value, and due by 12/31/2019. Perhaps she should take a voluntary distribution this year just to even out her taxable income over an additional year, or perhaps a disclaimer should be considered.
Permalink Submitted by Ben Meyer on Thu, 2018-08-09 02:41
The mother should also be able to elect the 5-year rule, which, in this case, would give a longer distribution period. The plan should be notified of the election. Additionally, the mother should complete a beneficiary designation soon. Or, as Alan says, consider a disclaimer if there are suitable contingent beneficiaries or estate legatees.
Permalink Submitted by Alan - IRA critic on Thu, 2018-08-09 16:32
Good point. Due to her age it appears that the 5 year rule will result in 1 or possibly 2 additional years before the IRA will be drained, and it also provides more flexibility since no particular amount must be taken out in any particular year. The account must be fully distributed no later than 12/21/2023 under the 5 year rule, and that is the only requirement. If the inherited IRA is inherited again, the successor beneficiary will be bound by the decision Mom makes and will not receive any additional stretch years.