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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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Lev - I just asked question about my wifes mother who died

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Lev - I just asked question about my wife's mother who died this year and tax consequences of IRA distribution. The mother had not taken the 2013 RMD. How do I handle the RMD for 2013?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
2013 RMD distribution is generally due by Dec 31 2013 - so there is no penalty for not taken RMD as long as it will be taken before that date.
As long as distribution is taken - there is no special treatment for RMD - on the tax return it will be reported as distribution.
Taxpayers may take distributions more than RMD - that is OK - so if you will take more than RMD amount in 2013 - there is no issue.

Customer:

So if it is distributed in 2013 it goes on the mother's tax even if it is distributed to the beneficiary? In this case the entire IRA could be distributed from the mother's IRA and the mother would owe no taxes for 2013 since the mother's income is low enough even with the distribution

Expert:  Lane replied 1 year ago.

Hi,

I have a different answer.

As the beneficiary of the IRA, normally the choice of how to take your own (as a non-spouse beneficiary) distributions is (1) to take it out over your life expectancy or (2) over - better, said, by the end of - a five year period.

But in he case of an IRA where the RMD had already started, (where death occurred after the Required Beginning Date) you only have the life expectancy method.

If the IRA holder is deceased, the question becomes how the beneficiary takes out the minimum amounts - as the person who has passed no longer has the requirement.

Remember IRA beneficiary designations (just as with qualified plan and life insurance beneficiary designations) pass outside of probate through "operation of agreement."

Here's an excellent overview:

https://personal.vanguard.com/us/whatweoffer/ira/inheritediranonspousermd
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4491
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 9 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.


Thanks much!

Let me know if I can help further,

Lane

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Lane
Lane
JD, MBA, CFP, CRPS
3630 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986