Hello,
Parent passed away in November 2022 at age 78 and was receiving RMDs. In 2023 when the account was distributed to the beneficiaries, a non-spouse IRA was opened for the total amount child received from parent IRA of approx. $16k.
Two 1099-Rs were received:
One was for $1,395.98 that had box 1 and 2a populated with this amount. Box 4 populated with $139.60 federal withhold, box 7 code 4, box 14 $13.96 state withhold and box 16 $1,395.98. It is my understanding that this 1099-R was for the RMD parent was supposed to take in 2022, so this amount once distributed to the beneficiary in 2023 was the tax responsibility of the child.
The second 1099-R appears to be for the distribution of the remaining value. This 1099-R had box 1 populated $16k, 2b “total distribution” checked and box 7 with code G4.
The institution where the money was rolled into said that these inherited funds from a parent to a child and that were deposited into a separate IRA account (child also has a traditional IRA of their own that is separate) would qualify under the 10 year rule for distribution. They also said that IRS guidelines were still gray on whether the child would have to take an RMD in 2023, but pending regulations could change requirements for 2024.
Questions:
Thanks
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Yes, you need to take distributions from the inherited IRA over the next 10 years, and be fully distributed in 2033. The distributions reported on the 1099-R are not labelled as RMD, but you can indicate that they are in TurboTax. That applies mainly to Rollovers, which you can't do with an inherited IRA anyway, so it's a moot point.
No, you didn't need to take an RMD in 2023.
No, this does not affect you making your annual contributions to your personal IRA.
Here's more info on IRS Requirements for RMD's.
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