The Weekly Scenario: IRA Beneficiaries
Question: My father passed away this year and I was named as the beneficiary of his IRA. Do I have to take a required minimum distribution from his IRA this year?
Answer: If your father has not taken his full required minimum distribution (RMD) for the year, then you will need to take any undistributed RMD.
Many beneficiaries may not take the distribution because of a mistaken belief that the RMD is owed to the owner’s estate, or that the owner died near year-end and there was not enough time to take it.
IRA beneficiaries sometimes think that no RMDs are required from an inherited traditional IRA before age 70 ½ and RMDs are never required from a Roth IRA.
In fact, for both traditional and Roth IRAs, RMDs must begin in the year after the IRA owner died.
Comment: Keep in mind that a 50% penalty applies to missed RMDs and while it is possible that the penalty can be waived, the IRS will usually only grant relief when there is good faith on the taxpayer’s part and the error is quickly remedied.
As always, if you have any questions or would like to learn more, please contact Steve Shane at email@example.com or .
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Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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