My siblings and I inherited a traditional IRA from our brother who passed away in March 2023. I am an eligible designated beneficiary and so may opt to take stretch distributions over my lifetime. If I take an RMD by 31 December of 2024, it is my understanding that the distribution will be based on the value of the holdings on 31 December, 2023 (the year of death).
My brother's IRA was with 2 different firms. The first provided us with a statement that showed the value on 31 Dec, 2023. The second firm just provided us with statements that started on 1 January 2024, and those statements only showed an end of month balance. (If I had the beginning balance I would know the value of the holdings on 31 Dec, 2023.) I reached out to the second firm this morning, but didn't get a helpful reply.
Am I correct that I need the 31 Dec, 2023 balance to calculate my RMD? If so, what do I do now?
Bsch4477 is correct. By operation of law, an IRA becomes maintained for the benefit of the beneficiaries immediately upon the death of the IRA participant, so with the death occurring in 2023 the financial institution is required to provide the beneficiaries with the year-end value of at least the value of the particular beneficiary's respective share of the inherited IRA. If separate accounts for each of the beneficiaries were established by the end of 2023, the financial institution is required to have issued a 2023 Form 5498 to each beneficiary showing the year-end value of their particular inherited IRA account. (The financial institution is also required to have issued a 2023 Form 1099-R to the decedent showing the date-of-death value, but this requirement is rarely satisfied.)
Even if separate accounts were not established by the end of 2023, the financial institution is still required to provide the beneficiaries with the 2023 year-end value since at that point the IRA is being maintained for the benefit of those beneficiaries (even if the financial institution has not yet been informed of the death).
To allow each beneficiary to use their own age for the determination of RMDs, the deadline to establish separate inherited IRA accounts in this case is December 31, 2024.
There should be no problem providing you with the balance at year end.
Bsch4477 is correct. By operation of law, an IRA becomes maintained for the benefit of the beneficiaries immediately upon the death of the IRA participant, so with the death occurring in 2023 the financial institution is required to provide the beneficiaries with the year-end value of at least the value of the particular beneficiary's respective share of the inherited IRA. If separate accounts for each of the beneficiaries were established by the end of 2023, the financial institution is required to have issued a 2023 Form 5498 to each beneficiary showing the year-end value of their particular inherited IRA account. (The financial institution is also required to have issued a 2023 Form 1099-R to the decedent showing the date-of-death value, but this requirement is rarely satisfied.)
Even if separate accounts were not established by the end of 2023, the financial institution is still required to provide the beneficiaries with the 2023 year-end value since at that point the IRA is being maintained for the benefit of those beneficiaries (even if the financial institution has not yet been informed of the death).
To allow each beneficiary to use their own age for the determination of RMDs, the deadline to establish separate inherited IRA accounts in this case is December 31, 2024.
Thanks to both of you for your replies. I sent another message to the 2nd firm, and got a more helpful (and useful) response this time. All holdings in the existing account (in my brother's name, or the trust's name) were sold by the end of 2023, so it was all cash by 31 Dec 2023. So, the cash amount that I received in 2024 equals the value that existed on 31 Dec 2023.
Thanks again for your help!!