RMD for Inherited IRA that crosses Calendar Years
If a decedent’s IRA is not transferred to beneficiaries until the following calendar year (e.g., IRA owner dies in Dec 2022, and assets are transferred to multiple beneficiaries in Jan 2023), do the beneficiaries use their FMV on the date of transfer to calculate their current year RMDs? The EOY (Dec 31, 2022) FMV for the pre-transferred assets exists, but is not readily available to all beneficiaries detailing their specific inherited portions.
Permalink Submitted by Alan - IRA critic on Wed, 2023-03-08 20:28
The actual 12/31/2022 balance times the % share inherited by each beneficiary is the amount used to calculate the 2023 RMD of each beneficiary. The value on the date of transfer is immaterial.
Permalink Submitted by Steve Lichtman on Wed, 2023-03-08 20:37
Thank you for your response. It may be very challenging for each beneficiary to obtain the 12/31/2022 balance and their individiual % when it is not provided by the financial instituation on their transfer confirmation statement. Claim forms will need to be obtained for documentation, too.
Permalink Submitted by Alan - IRA critic on Wed, 2023-03-08 21:42
If the correct balance cannot be obtained after reasonable effort, and the individual inherited IRAs were established early in the year, each beneficiary could use their opening balance to calculate their RMD, and make a note of this in the unlikely case that the IRS would ever question this.