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August 17, 2017

RMD for year of death

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RMD for year of death

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?

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 If you miss this deadline, you will owe the IRS an excess accumulation penalty of 50% of the amount not withdrawn (by the deadline).

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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