Monthly IRA Updates

 

 

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THREE THINGS TO KNOW ABOUT THE YEAR OF DEATH RMD

By Sarah Brenner, JD
IRA Analyst

Sarah Brenner

 

There are always questions that come up as to the correct way to handle the required minimum distribution (RMD) for the year of death of the IRA owner. Here are three things you need to know about the year of death RMD.

1. The RMD for the year of death will only need to be taken if the IRA owner died after his required beginning date. The required beginning date for IRAs is April 1 of the year following the year the IRA owner reaches age 70 ½. If the IRA owner dies before this date, there is no RMD required for the year of death. This is true even if the IRA owner is already age 70 ½ and even though he has already taken part of the RMD.

Example: Jack celebrates his 70th birthday in January of 2019. He reaches age 70 1/2 in July 2019. He takes half of his 2019 RMD. He dies in December 2019. No further RMD distributions need to be taken after Jack’s death because he died before his required beginning date (April 1, 2020).

 

 

 

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Mailbag

 

Q: I have a question about an IRA split between my husband and me. I got half of his retirement IRA, and I was wondering if I am responsible for the taxes if I was to withdraw the funds. Also, if I didn't want all the funds in the account before I opened it, could I tell the custodian to give me a portion and put the rest in? If I could, would I be charged a penalty of 10%?

Answer

Q: I turn 70 ½ this year and my last day of work was September 30, 2019. Am I required to take an RMD from my work profit sharing 401(k) plan by April of 2020 and, if so, is the RMD calculated on the 12/31/18 account balance?

Answer

Q: I was wondering, will incorrect information on a Beneficiary Designation form cause it to be invalid? I see forms with a wrong or missing date of birth, or ones listing more than one beneficiary, each assigned 100%.

Answer

Have a question for our IRA Techincal Team?
Email your questions to us at mailbag@irahelp.com. Selected questions will be featured every Thursday in the Slott Report.

 

 

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