How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lane Your Own Question

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4166
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

Background: My wife is one of four equal beneficiaries of

Resolved Question:

Background:
My wife is one of four equal beneficiaries of the Estate of her late aunt, who died in 2010. Her aunt left an IRA without designated beneficiaries. The Estate became the "interim" beneficiary of the IRA while the IRS was asked to determine (as a result of a private letter ruling request made in early 2011) if my wife (and the other 3 benes) could be the beneficiaries of the IRA. The Estate attorney [EA] said that no required minimum required distributions [RMDs] should be taken until the determination was made, lest the determination be jeopardized. The determination was made in early 2013, immediately after which the Estate took the 2011, 2012, and 2013 RMDs. The balance of the Estate IRA was then distributed in equal parts to the 4 beneficiaries (into inherited IRA accounts).
My questions:
1. Which years require filing for waivers of the 50% IRS penalty for late RMDs?
(The EA thinks that only 2011 requires this, as he says the Estate fiscal year -that ends on October 31st- somehow gives him a pass on having to file a waiver for the 2012 RMD.)
2. Who files the waiver, the Estate or the 4 subsequent beneficiaries? (The EA claims the Estate must file any waiver(s) but the taxes must be paid directly by the beneficiaries.)
3. Must each of the 4 beneficiaries take their own 2013 RMDs form their newly inherited IRAs (that's in addition to the 2013 RMD taken by the Estate earlier this year)?
Thank you in advance for a response that is legally responsible. (I have always stuck to the letter of the law and don't want to get into trouble with this late RMD/waiver business.)
Submitted: 12 months ago.
Category: Tax
Expert:  Lane replied 12 months ago.

Lane :

Hi,

Lane :

1. Which years require filing for waivers of the 50% IRS penalty for late RMDs? I agree wit the EA here, if the 2012 DIst was done before the end of the Estate's tax year

Customer:

Hi

Customer:

OK

Customer:

But wouldn't the 2012 esttae year be Oct 2012, not Oct 2013?

Lane :

2. Who files the waiver, the Estate or the 4 subsequent beneficiaries? Again, I would agress, because during that tim the estate WAS the beneficiary (quite honestly I'm surprised that the bene's didn't simply inherit as per the will here... someone must have made a mistake, regarding the beneficiaries not beng on file?

Lane :

OCt 2012 through 2013

Lane :

Because the ESTATE has already taken

Lane :

and that relates to the next questions, no there should not be RMDs taken twice in the same tax year

Lane :

although they don't match ... Calendar vs fiscal, the 2013 RMD has been taken

Lane :

It's interesting that the estate doesn't pay the taxes for the years it TOOK the RMD, however, ... does the PLR address this in some way?

Customer:

No clue as I haven't read the ruling. I think the ruling simply states my wife and the other 3 benes get to be benes of the IRA. The EA had the 4 benes individually pay the tax as it said the forthcoming form K-1s to the denes will show each bene's share of the rmds.

Lane :

Now, it WOULD make sense that the bene's pay tax on the BALANCE? But if newly created beneficial IRAs were created then they won't have RMD (and taxes) until 2014 in my opinion

Lane :

Ahhh ok, that means the trust took a deduction for the distribution so THEY have to pay the tax ... that makes sense

Lane :

AND you want it that way ... as the tax bralets of the trust ae much lower (higher tax on the same amount of money)

Lane :

sorry "brackets"

Lane :

Not over $2,450 15% of the taxable income


Over $2,450 but $367.50 plus 25% of
not over $5,700 the excess over $2,450


Over $5,700 but $1,180 plus 28% of
not over $8,750 the excess over $5,700


Over $8,750 but $2,034 plus 33% of
not over $11,950 the excess over $8,750


Over $11,950 $3,090 plus 39.6% of
the excess over $11,950

Customer:

OK so to recap, based on the info I provided you, your opinion is that only the late 2011 RMD requires a waiver request, which will be filed by the Estate. And my wife does not need to take her own 2013 RMD by 12/31/13 that would be in addition to the 2013 RMD the estate already took. Does that sound right?

Lane :

You have it ... what IRS will want to see is a 2013 tax year RMD taken and it was, otherwise you have double taxation

Customer:

Ok. You have been very helpful and I am very appreciative of your no-nonsense assistance. Thank you very much.

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4166
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 4 other Tax Specialists are ready to help you
Expert:  Lane replied 12 months ago.

Thanks much, Alex.

Sounds like you have a good EA.


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question


OR set me up as your preferred expert on your home page.


Regardless, thanks again,

Lane


JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.