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RMD for year of death

Last Updated September 23, 2016

Question: 

Dear Denise,

I inherited an IRA from my uncle, who died earlier this year before taking his required minimum distribution (RMD).  I am getting conflicting information about whether his RMD amount still needs to be distributed, and if so, who should take the distribution.  Assuming that his RMD should still be taken, should it be taken by me or his estate?

Answer: 

If an IRA owner dies before taking his/her RMD, that RMD amount must be taken by the IRA owner’s beneficiary.  As such, you must take your uncle’s RMD amount.

Your uncle’s RMD amount must be calculated as if he lived through to the end of the year.

IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. (Form 1099-R), must be issued for distributions taken from IRAs and other retirement accounts.  Form 1099-R is issued to the IRS and the account owner who is responsible for including the distribution in income.

In this case, the Form 1099-R for the amount must be issued under your Social Security number, and must be added to your income for the year in which the distribution occurs.

Please note: You must withdraw your uncle’s RMD by the end of the year.  If you miss this deadline, you will owe the IRS an excess accumulation penalty of 50% of the amount not withdrawn (by the deadline).

Be sure to talk to your tax or financial professional for assistance with making sure you distribute the right amount each year.

Answered by Denise Appleby