IRA RMD

[gharned]

My wife had a beneficiary IRA she inherited from her father. In February 2019 she closed the account and received the full balance of the account as income. Is any part of that distribution considered a RMD, or was none of it a RMD?

[macuser_22]

Just say that it was all a RMD since closing the account not only satisfies the RMD but exceeds it.   Nothing about the RMD question goes on a tax return at all - the question is just to be warn of a penalty for not taking the RMD.

[DianeC958]

Yes, the distribution is considered an RMD for tax purposes.  

TurboTax is asking to see if there is a penalty that needs to be calculated if the amount is lower than the RMD amount.  Since your wife withdrew the whole amount, there is no penalty due.

What is an RMD?

@gharned

[jtax]

I think that technically there probably was an RMD required and part of the total distribution satisfied that. (RMDs are minimums. you can always take out more.) Inherited IRAs have RMDs no matter what the beneficiaries age.

In reality unless she has other inherited IRAs from her father it doesn't mater. The reason TT asks about this is that if you have multiple accounts the total RMD is calculated based on the total value of all accounts (on 12/31 of the prior tax year year), but you can take out that amount from any account. (I.e. it doesn't need to be a little from each account). So TT asks for each one and then adds up the RMD to see if it was enough.

For RMD purposes all accounts of the same type are taken together. (401k, Trad IRA, inherited IRA from the same person.) So unless your wife has another IRA inherited from her father, the answer doesn't matter. Go ahead and say it was all RMD (or go back if you see a penalty for not taking an RMD show up).

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