Deceased Taxpayer, IRA & Required Minimum Distribution

[FederalInquirer]

Good Afternoon,

My mother passed away in 2023. She had a mutual fund account that had been rolled over from her 401K many years ago. My mother was withdrawing the Required Minimum Distribution (RMD) every year for this account, and paying taxes on it

After her death, in the middle of last year, the account was transferred to my name as a Traditional IRA, b/c I was the beneficiary in her account. I'm also the executor of her Will

What happens with the RMD for 2023?

- Because in 2023 it wasn't taken, and it was supposed to be taken before December 2023

- Also if I request a RMD now in 2024, how do I do that if the accounts aren't hers anymore, but they're under my name now

TIA

Best regards,

Nick

[DianeW777]

Based on the information below you must take distribution for 2023 after her death for you, and 2024. The distribution requirements are shown below for a beneficiary that is not a spouse and where the account owner began required minimum distributions (RMDs) before death.

The amount will be based on the information below but your financial institution will have the numbers for you.

IRS RMDs for Beneficiary

Distribute using Table I-Non Spouse

• Use younger of 1) beneficiary’s age or 2) owner’s age at birthday in year of death
• Determine beneficiary’s age at year-end following year of owner’s death
• Use oldest age of multiple beneficiaries
• Reduce beginning life expectancy by 1 for each subsequent year
• Can take owner’s RMD for year of death

[FederalInquirer]

Thanks for the information

Just to clarify, I'm not 71 1/2 years old. If that hasn't changed it's the age after which RMDs can be taken. Do I have to take the RMD anyways? Are there any other choices?

Thank you in advance,

Nck

[fanfare]

Since she had already been required to take distributions, you also must take a distribution yearly based on the age of whoever is the younger person, which would be you.  In the tenth anniversary year you have to distribute 100%.

But first, you have to take the RMD that she missed in 2023

[fanfare]

Her missed RMD is based on the value at end of 2022.

Your first RMD is based on the value at the end of 2023.

@FederalInquirer 

[fanfare]

If it's not clear, this is all your taxable income.

use the custodian's inherited IRA distribution form and mark the box for non-spouse beneficiary.

You also have to submit a Signed W-4R for the withholding percentage you want.

@FederalInquirer 

[FederalInquirer]

Thank you for the to-the-point explanation

I see... That means that in her 2023 tax return nothing has to be entered about the RMD b/c she didn't take any, correct?

The RMD missed in 2023 I think will be in my 2024 tax return?

Thank you in advance

Nick

[DianeW777]

Yes, you will include both the 2023 and 2024 distributions on the 2024 tax return since it was missed in 2023. 

• Form W-4R (You can use this to have federal tax withheld from the payments if you choose)

As a reminder: If the account holder's death occurred after the required beginning date (your scenario), the non-spouse beneficiary may:

• Take distributions based on the longer of their own life expectancy or the account owner's remaining life expectancy.

@FederalInquirer 

[FederalInquirer]

Let me clarify that the mutual fund where my mother's IRA is held calculated the RMD for 2023 after I reported she had passed away, deducted 10% taxes, and sent the checks to me. Later on last year they issued a 1099-R with my SSN, so I have to file it with my 2023 tax return

Regarding the RMD for 2024 I think I have until Dec 31, 2024 to take it, correct?

Now I'm confused, b/c the C.S.Rep. from the mutual fund told me on the phone that I didn't have to take it now, but that I had to withdraw all the funds before 10 years. She said that for example, I could wait after my retirement (to be in a lower tax bracket), to start taking distributions??? Is she right?

TIA

[fanfare]

the rep you talked to is going by half the old rule and needs to edjamacated.

You are subject to yearly RMD as I described because your mom started RMDs.

The old law did not have a 10-year rule.

@FederalInquirer