Inherited Ira RMD distributions
I have a very unique question!
My husband’s parents passed away earlier this year within a week of each other. Father was 92 and mother was 83. They each had an IRA, and were taking their RMD’s. They were taking monthly distributions. The father died first, and brokerage firm transferred money immediately to mother’s account. (Wife was sole beneficiary) The combined IRA account then listed the three children(including my husband) as beneficiaries. Unfortunately, mother died a week later.
Wife (Mother) was not able to take remaining RMD of husband before she passed away, and the account was closed and the balance of the IRA was distributed to the three children.
From reading various articles, the children have to take the remaining required minimum distributions that weren’t distributed for 2021, and then can spread out distributions over 10 years any way they want.
Would they combine mother and father’s RMD’s? (Total for the year less amounts already received). They passed away in February and March. I believe the correct procedure would have been for wife to receive husbands RMD right away, but it wasn’t processed. Then, the account was closed and transferred to the three children.
Thanks for your assistance in this matter.
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-10 18:02
Technically, the children are not responsible for the 2021 RMD for father because they did not inherit from father. Mother inherited from father and was responsible for completing his RMD, but the IRS will not pursue a deceased beneficiary for that RMD, so the children only need to complete mother’s 2021 RMD.
Are you sure about the transaction timelines here? It seems very unlikely that mother (even with help) could have received and submitted a death certificate to establish an inherited IRA within a week, and then elected ownership and made her own beneficiary designations before passing. That makes me think that the instructions for these actions were prepared and signed off in advance of father’s passing?
If so, mother’s estate was never an actual beneficiary of either IRA, since the 10 year rule would not apply to beneficiaries of her estate. It would only apply if the children were specifically named as beneficiaries of her IRA.
Permalink Submitted by VICTORIA LUKASAVITZ on Tue, 2021-08-10 18:32
Thanks for your answer. That makes sense that the children wouldn’t include Dad’s RMD. I just didn’t want to have any issues with the IRS wondering what happened to Dad’s RMD. It will eventually get taxed by children when they take it out!