IRA owner dies before RMD annual withdrawal

Submitted by John Jawor on Sat, 2022-10-22 10:48

90 year old passed away, leaves 200k to son. Owner had not taken his annual RMD, was set up for Nov 15.
Bank the funds are at are saying son must take the father’s RMD before moving.

I think he can move to INH IRA and then just take out over 10 years. he does plan to draw out 10% a year but will be getting over 5% interest, so after 5 years, balance will still be over 145k.

Queston 1. Does he have to take out Dad’s rmd before moving to inherited IRA??

Question 2. Must he take annual distributions or could he elect to defer for 10 years than take it all out at once ( not likely due to taxes)
Q3? while he plans to take annual distributions ( son is 62) , if he doesnt take out annual distributions does he still owe taxes on what his rmd calculation was during the 10 years of deferral until cashing in inh IRA?

thanks in advance.



Submitted by Alan - IRA critic on Sat, 2022-10-22 14:30

  • The bank is incorrect to require that the owner’s RMD be distributed to son before transferring the account. He has until year end to do that, and in addition the bank has no way of knowing if father had completed his RMD from another IRA at a different institution, or if the son inherited another IRA from father and completed father’s RMD from that account. The bank is not in violation of any IRS rules by NOT distributing the RMD.
  • That said, since son is responsible for completing father’s 2022 RMD before year end, and cannot spread it out over 10 years, it is probably not worth the trouble to dispute the distribution of father’s RMD at this time.
  • Because father passed after RBD, the proposed IRS Secure Act Regs require son to take out annual life expectancy RMDs in years 1-9 (2023-2031) before draining the account in 2032. There is still a small chance that the IRS could drop this requirement when the final Regs are released, and hopefully they will be released before son has to make a decision about the 2023 beneficiary RMD.


Submitted by John Jawor on Mon, 2022-10-24 13:13

What would the remedy be if someone didnt do the deceaseds RMD that was due and all the IRA money is now in an inh IRA and the RMD for deceased is still due by end of year?  how would that be handled?thanks as always!



Submitted by Alan - IRA critic on Mon, 2022-10-24 15:24

A provision in the Secure Act proposed Regs provides an automatic penalty waiver if the year of death RMD is taken by the beneficiary by the filing due date including extensions for the year of death. Therefore, there will be extra time to complete the year of death RMD. Previously, if the RMD was not taken by year end, the beneficiary could still complete it in the following year, but would have to file a 5329 to request that the penalty be waived. The IRS has been approving such waiver requests. 



Submitted by John Jawor on Mon, 2022-10-24 18:12

As we are currently dealing with this case with another bank.The bank says the deceased owner IRA must transfer to inherited IRA first and then the distribution RMD would be processed as it should have been for dad. They will not do the distribution from the dad’s IRA as he has passed.   So what is the process as related to this case?RMD from Dad’s IRA before  transferring remainer to INH IRA or transfer Dad’s IRA to INH IRA, then son takes the distribution that Dad should have taken before year end? 



Submitted by Alan - IRA critic on Mon, 2022-10-24 18:25

They are correct. Nothing can be done until the inherited IRA is propertly retitled as an inherited IRA for the son. This process typically also involves transferring the balance to a newly opened inherited IRA account, as this eliminates the accounting issues caused by 1099R forms being issued to different SSNs on the same account. Once the balance is transferred to the son’s new inherited IRA, the son can complete Dad’s RMD. A 5329 to request the penalty be waived is only needed if this is not done by the applicable deadline. Under the proposed Regs the son could determine whether it’s in his best interest to have this taxable distribution done this year or next year prior to 4/15.



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