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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 15164
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Here is our complex situation: Our father "XXXXX XXXXX", born

Resolved Question:

Here is our complex situation:
Our father "XXXXX XXXXX", born Nov 1917, died Sept 2012.
Minimum Required Distributions (MRD) on his traditional IRAs was paid in 2012 after his death.

His daughter "XXXXX XXXXX", the executor, has received poor advice on handling the IRAs. "John", being confused in his latter years, confused "executor" with "beneficiary". His will divides all assets equally between the 3 children: Jane, "George" (me), and "Ralph" (my brother).

He had 4 IRAs. On all IRAs John had Jane as primary beneficiary (thinking it meant executor), on one had George as contingent beneficiary, and Ralph on none.

IRA #1 - Taken as a Beneficiary IRA by Jane. She then took a distribution of 2/3s of the assets and "gifted" George and Ralph each half, after deducting large tax liability. Then...

IRA #2 - Jane disclaimed 2/3s. George disclaimed 1/2 of the remaining. Each received Beneficiary IRAs (1/3 shares), using their own IRS Single Life Expectancy for MRDs. The remainder dropped into the estate and Ralph was given a check for his 1/3 , presumably taxable in total this year.

IRA #3 (Mid-sized) - Jane disclaimed 2/3s receiving a Beneficiary IRAs for 1/3 share using her own IRS Single Life Expct.for MRDs. Ralph and George were each given a check for his 1/3 , presumably taxable in total this year.

IRA #4 (large) - Again Jane disclaimed 2/3s receiving a Beneficiary IRAs (1/3 share). After insistence by George (me), the estate (2/3s) share IRA #4 was transferred to more cooperative bank. They have created a pair of Beneficiary IRAs from the estate for George and Ralph. These will require MRDs based on the deceased John's Single Life Expt. or about 24% per year.

Question: George received a distribution from the estate from IRA #3 (half the disclaimed remainder).

-> Can that distribution be used to cover the MRD of IRA #4 for this year? <-

I know similar IRAs can be grouped and MRD made from only one if sufficient to cover required amounts from the combined IRAs. In this case, IRA #3 was paid into an estate checking account and then my share was paid by check out of that account - not directly to me from the IRA holder.
Submitted: 11 months ago.
Category: Finance
Expert:  Megan C replied 11 months ago.

Megan C :

Thanks for your question, and thanks for using JustAnswer.com

Megan C :

How are you today?

Megan C :

The answer is "yes" you can use the distribution from the IRA to satisfy your RMD distribution for the year.

Customer:

Is there any type of IRS reference that I can point to if the IRS questions my action? Remember, IRA #3 dropped into the estate, not directly to me. The executor cut a check from that account to me per terms of the will. IRA #4 is directly naming me as a beneficiary from the estate inherited IRA. Can I tie that general estate distribution in #3 to MRD from the child of IRA #4. I just want to be clear before I make a serious commitment.

Megan C :

Oh I thought that IRA check went directly to you I'm sorry I missed that

Megan C :

In that event, the estate took that distribution and you would have to take an RMD out of #4 based on #4

Megan C :

Does that make sense?

Customer:

So, I cannot take "credit" for the distribution to the estate as an MRD? It simply goes to no one?

Megan C :

That is correct

Customer:

Just for clarity, I must be fully taxed on my share og IRA #3 and also take a taxable distribution of 25% (Single Life expectancy of my father) from IRA #4? Bummer

Megan C :

Yes, that is correct

Customer:

thank you.

Megan C :

I'm sorry if this is not what you had hoped

Megan C :

You're welcome

Megan C :

Is there anything else I can assist you with today?

Megan C :

If not, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

No, thanks, bye

Customer:

yes I will

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 15164
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 4 other Finance Specialists are ready to help you
Expert:  Megan C replied 11 months ago.
Thanks, YLS for your positive rating. Please come back and visit me any time you need a tax, finance, or social security question answered. It was a pleasure working with you today.

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