Year of death RMD

[Rbtt123]

Mother died Feb 2022 leaving 3 IRAs to 4 Beneficiaries ( her Children). She did not take any RMDs before she died. I know that the beneficiaries need to take her 2022 RMDs by year end. One beneficiary is considering taking a lump sum distribution from one of the IRAs instead of moving it into an inherited IRA and this lump sum will be an amount greater than her RMD requirement for all 3 IRAs.

1: With this scenario, Can one beneficiary satisfy the ’22 RMD requirements or do all the beneficiaries need to take their own percentage of her RMDs?

2: Can one beneficiary use one IRA to satisfy the total RMD requirements of all 3 IRAs?

[MinhT1]

As the IRAs have been divided between the beneficiaries, each beneficiary has to take their own RMD.

Each beneficiary can choose to withdraw the required distribution from any one of the inherited IRAs as long as the total RMD is satisfied.

[Rbtt123]

The IRAs have not been moved into Inherited IRAs yet. The mother's IRAs are giving each beneficiary the option of taking their portion as lump sum or move $ to inherited IRAs. So if one beneficiary opts to take a lump sum distribution ,which is greater than all the IRAs Year of Death RMDs, are you saying that the other Benes still need to take their portion of the year of death RMD? 

[JulieS]

Yes, that is correct. Each beneficiary needs to decide how to take their distribution. 

If one chooses to receive the entire account balance rather than roll the amount into an inherited IRA, that doesn't remove the responsibility from the other two beneficiaries to take their Required Minimum Distribution or choose to use the five year rule. 

The alternative to taking your RMD is to use the five year rule. The  five year rule requires the beneficiaries who are not taking RMDs a based on life expectancy to withdraw the entire balance of the IRA by December 31 of  the fifth anniversary of the owner’s death. 

For example, if the owner died in 2022, the beneficiary would have to fully distribute the plan by December 31, 2027. The beneficiary is allowed, but not required, to take distributions prior to that date. 

[Rbtt123]

Sorry to press the point but I’m confused. My question was about satisfying the mothers RMDs in year of death only. I believe this is different than the future beneficiary RMD distribution options you are discussing.

Thanks again.

[GeorgeM777]

The IRA beneficiary is responsible for taking the year-of-death RMD.   In other words, if the year-of-death RMD was not taken by the IRA owner (prior to death), it must be taken by the designated beneficiary. The RMD is reported as income by the beneficiary.

The exception to the above would be if the estate was the named beneficiary.  However, in your situation, it appears that your mother's estate was not the named beneficiary for the IRA, and thus, it falls on the beneficiaries to take the required RMD. 

@Rbtt123

[dmertz · Accepted solution]

1.  Yes.  CFR 1.401(a)(9)-5 A-4(a) says simply that the year-of-death RMD must be distributed to "a beneficiary."  There is no requirement that the beneficiaries share equally in completing the year-of-death RMD.  https://www.law.cornell.edu/cfr/text/26/1.401(a)(9)-5

2.  Assuming that Mother was the participant of all three IRAs (none was an inherited IRA maintained for the benefit of Mother as beneficiary), Yes.  Because all three IRAs were received from the same decedent and have the same RMD requirement, the RMD for each IRA can be aggregated with the others and the total taken from just one of the inherited IRAs.  These inherited IRAs can also be combined into a single inherited IRA by trustee-to-trustee transfer, but not by distribution and rollover.