RMD Post Death 2021
78 year old Mother passed away January 2nd 2021. No RMD was taken by her. Other company had all 4 beneficiaries (the kids – ages 52-62) split the account and told them that the youngest beneficiary could take the whole RMD amount based on their age to satisfy the RMD for 2021. This doesn’t sound right to me, I wanted to confirm.
Permalink Submitted by Alan - IRA critic on Wed, 2021-09-01 18:25
It isn’t right. The 2021 RMD is mother’s RMD. The age of the beneficiaries does not matter with respect to the 2021 year of death RMD. IRS Regs indicate that the year of death RMD can be completed in any combination by the beneficiaries. One of the 4 might want to take a large distribution, and if it covers the RMD, the others do not have to take distributions for 2021. Of course, resolving this requires coordination and communication between the beneficiaries. If a beneficiary does not trust another beneficiary to follow through, the beneficiary could take out their pro rata share (25%) of mother’s RMD. The IRS has not been penalizing any beneficiary who takes out their share even if the others do not take a distribution at all.
Permalink Submitted by [email protected] on Wed, 2021-09-01 18:59
Thank you, that’s what I thought. Going forward, has the IRS come back with whether there will be beneficiary RMDs annually or if the inherited amount just needs to be out by year 10? I would think the IRS would maintain an annual RMD for tax revenue – but again, would like to confirm and haven’t seen any update on this when I look.Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2021-09-01 20:59
The IRS erred with the first Pub 590B stating that annual RMDs would be required under the 10 year rule. They quickly admitted to making an error and the more recent corrected 590 B makes it clear that there are no annual RMDs as part of the 10 year rule. The only requirement is draining the account by the end of year 10.