Satisfying decendents RMD

Submitted by Wendy Mommaerts on Tue, 2023-04-04 13:14

We have a client who just passed away and we would like to move his 2023 RMD into his Trust account now just like we’ve done each year.

Can we move the RMD now or do we need to let the beneficiaries inherit the IRA first and then let the beneficiaries satisfy the 2023 RMD? Does it matter which way it gets satisfied?



Submitted by Alan - IRA critic on Tue, 2023-04-04 15:57

  • Yes, it matters. The beneficiaries inherited the IRA immediately upon client’s death. It would be illegal to divert funds away from the beneficiaries even with their knowledge. Client’s final tax return should only include income received prior to his death. While this applies to all post death distributions, the year of death RMD is not  due until year end and also became a beneficiary responsibility as stated in the tax code. The beneficiaries can satisfy the 2023 RMD amount of the client in any proportion between them.
  • While the beneficiaries could disclaim all or part of the IRA, the IRA would go to any contingent beneficiary named by client, or if none by the default beneficiary provisions in the IRA agreement. It is possible that client’s estate might inherit under these provisions, or via a pour over will his trust. Any distributions then done to the trust would be trust reported income under the trust’s TIN.

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