RMD

Submitted by Kathleen Hughson on Sun, 2020-04-26 22:23

Individual with a traditional IRA passes away in 2019 at the age of 91. IRA beneficiary is a qualified trust. Trust has 10 beneficiaries named with the oldest being born in 1947. Spring of 2020 everyone cashes out their share of the IRA except two individuals, one born in 1955 and the other in 1956. In determining how much to withdraw for RMD whose age is it based on and which IRS table is used to determine amount?



Submitted by Alan - IRA critic on Sun, 2020-04-26 23:22

  • First, if the IRA owner did not complete their 2019 RMD, the trust (or beneficiaries thereof) is responsible to complete it. While that was undoubtedly accomplished with the 2020 distributions, technically a Form 5329 should be filed by the beneficiaries or trust to request a penalty waiver. Since there are 10 of them, this is a hassle. A compromise might be to have just one or two of them file the 5329 indicating that the decedent’s 2019 RMD has been distributed.
  • 2020 beneficiary RMDs have been waived.
  • Starting in 2021, the RMD for both should be based on the age of the oldest beneficiary. The divisor will be calculated by first determining the age of that beneficiary on 12/31/2020, looking up the divisor in Table I, and then reducing that divisor by 1.0 for the 2021 divisor. The Secure Act does not apply here.
  • The above applies whether the IRA is still in the trust, or if the IRA has been assigned out of the trust by the trustee to the two remaining beneficiaries who now have separate inherited IRA accounts.

Submitted by Kathleen Hughson on Mon, 2020-04-27 15:38

2019 RMD was taken by the deceased. In 2020 the IRA was assigned out of the trust to the ten individuals. All of them taking their share in cash except for two born in 1955 and 1956.

Submitted by Alan - IRA critic on Mon, 2020-04-27 16:04

Fairly simple then. There will only two beneficiaries left, the oldest being the one born in 1955 that determinies the RMD divisor. Therefore, my bullet point 3 above applies.

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