beneficiaries taking parent’s IRA RMD shortfall
Hello,
My client the widowed mother, 89 years old, passed away in 2024. She had IRAs located at three separate financial institutions, each with the same beneficiaries, and with the same beneficiary percentages. None of the IRAs were inherited beneficiary IRAs. Her 2024 RMDs from each institution, and what she took prior to her passing, are:
Institution 1: $249,000 RMD from which she took nothing in 2024 prior to her passing.
Institution 2: $3,300 RMD from which she took $1,650 in 2024 prior to her passing.
Institution 3: $1,000 RMD from which she closed out the account and took all $87,000 of it in 2024 prior to her passing.
From the above, her total 2024 RMD was $253,300 ($249,000 + $3,300 + $1,000). Since she took out only $88,650 ($1,650 + $87,000), I understand her beneficiaries must take the remaining portion $164,650 ($253,300 – $88,650) of her RMD.
If the mother was alive, she could have taken the remainder of her RMD from Institution 1 due to the “pooling” of RMDs. Can the beneficiaries do the same, and take the remainder of her 2024 RMD ($164,650) from Institution 1, and $0 from Institution 2?
Are there rules that after the IRA owner passes, the beneficiaries must take the full undistributed portion of the RMD from that/each institution? If there are rules like this, then the beneficiaries would be taking more than the mother’s original RMD of $253,300 since the mother closed out the her account in Institution 3.
Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2024-09-09 17:47
Fortunately, the beneficiaries and %s are the same for each IRA account or this would become very complicated. As it is, after establishing their separate inherited IRA accounts, they can complete the remaining RMD of 164,650 in any combination from their inherited IRAs. They can also complete this in 2024 or defer all or part of the remainder to as late as 12/31/2025 according to the recent Secure Act Regs. Therefore, not only is there flexibility in who completes the 2024 RMD, but also in which year they complete it. Obviously, this will require coordination and cooperation between the beneficiaries.
Further, Inst 1 and 2 inherited IRAs could be combined into a single inherited IRA for each beneficiary by direct transfer because they were both inherited from the same decedent.