Inherited IRA

Submitted by Heidi Quinn on Fri, 2022-12-02 21:01

My 86 year old father died in January of 2022. The custodian (TIAA) reports that he made a RMD in 2021 but not in 2022 (he died in January). The beneficies are his three adult daughers. Must the beneficiaries “take” the 2022 RMD? If so, shouldn’t have the custodian done that? Is there any leeway on the 2022 RMD if the death occured in January?
Thanks in advance.
HQuinn



Submitted by Alan - IRA critic on Fri, 2022-12-02 22:40

  • The only leeway is that the proposed Secure Act Regs include a provision that the year of death RMD that formerly would have been due by 12/31/2022 can be delayed to 2023, either to 4/15/2023 or to 10/15/2023 for any beneficiary that files an extension by 4/15. A Form 5329 would not be required since the penalty waiver is automatic in this situation. While these Regs are still only proposed and not final, the IRS intends that they be used, with the only exception being certain beneficiary RMDs for 2021 and 2022. In your case, these are your father’s year of death RMDs, so you can rely on this relief.
  • Also, note that the 3 daughters do not have to take his 2022 RMD in proportion. The year of death RMD can be taken in any combination between the 3. For example, if one of them needs a distribution that is at least as large as the 2022 RMD, the others do not have to participate. Of course, this option take coordination and communication between the 3 of them. Again, the IRS does not care which of them completes the RMD as long as it is distributed from the inherited IRAs.
  • Custodians do not automatically make these distributions because they do not know how many other IRAs might have been inherited from your father, or even if your father might have possibly satisfied his 2022 RMD from another IRA he owned at another firm. Custodians should not be making any distributions not requested by an owner or beneficiary as they could really mess up someone’s plan. RMD compliance is the beneficiary’s responsibility.
  • Also, in 2023 the 3 of you will most likely have to take a life expectancy RMD in year 1 of the 10 year rule because father passed after his RMDs had begun. You may not want to have both father’s 2022 RMD taxed in the same year you have to take your own beneficiary RMD, so while you could delay the 2022 RMD, it might be better to take it out before year end.

Submitted by Heidi Quinn on Wed, 2022-12-28 18:55

based on the slott report dated 12/28/22,does secure 2.0 silence on certain issues suggest that an inheriated ira in 2022 must pay the original owners Rmd if not taken by the owner( who is older than 72)? or does the waiver (for a daughter) still exist as long as the original owners Rmd is taken by the daughter by 4/15/23?

Submitted by Alan - IRA critic on Wed, 2022-12-28 19:39

There is no waiver for completing the year of death RMD (2022), but the deadline for that is extended to the tax due date including extensions for the year of death return. There are no beneficiary RMD waivers for daughter since the first beneficiary RMD is due for 2023 and beyond. 

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