Decedent’s RMD
I have clients where one client passed away this year. Her RMD for 2021 is $ 3,518. She didn’t take any of her RMD prior to her death. Her husband’s RMD for 2021 is $ 107,443. He takes out $ 15,000/month, so he is way over the required amount. Her IRA is going to get transferred into his as a Traditional IRA.
My question is since all of the funds are going to get transferred into the husbands IRA, does the IRS say that his RMD for 2021 is now $ 110,961 (107,443+3,518) or is it looked at as is she was still alive and that $ 3,518 needs to be taken?
Permalink Submitted by Alan - IRA critic on Wed, 2021-06-09 16:55
Her year of death RMD of 3518 must be completed by the end of 2021 by her beneficiary (husband). But he can do so after assuming ownership of her IRA and directly transferring it into his IRA. Therefore, he will have to distribute 3518 more than he would have. He has until year end to incorporate the additional 3518 into his RMD distributions. The easiest way is to complete his schedule 15k a month (around August), then take out the 3518 in September.
It is best for him to assume ownership and then do a direct transfer into his IRA as neither one of these are reportable distributions and that avoids issues with the one rollover limit by not using up a rollover. In addition, if he took a distribution of her IRA (reportable on 1099R), he could only roll over the excess of 3518 to his IRA, since 3518 of that distribution was an RMD, and RMDs cannot be rolled over.
Permalink Submitted by Robert Roselli on Thu, 2021-06-10 12:50
I think I’m following you. It sounds like he should roll it over to his IRA first before taking any RMDs from his wife’s account. Once he does that, his RMD will be $ 110,961. Since he is going to stick with his $ 15,000/month withdrawal from his IRA, he doesn’t have to take that $ 3,518 since his own withdrawals will more than cover the $ 110,961.Are my assumptions correct?
Permalink Submitted by Alan - IRA critic on Thu, 2021-06-10 16:06
Yes, as long as he distributes a minimum of 110,961, all RMD requirements for both of them will be met. Since all distributions will come from his IRA, there will be a single 1099R issued for that account. In addition, the way his monthly installments are set up, he would be distributing 3518 more (183,518 v 180,000) if he completed her RMD from the inherited account in addition to continuing the 15k monthly distributions from his owned IRA.