Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 09-14-2015, 05:59 PM
Junior Member
 
Join Date: Sep 2015
Posts: 1
RMD in Year of Death: Let It Happen to Decedent's Account?

Hi,

My mother died earlier this year at age 86. Before her death, she had not received any of her 2015 Required Minimum Distribution (RMD). Can her savings account still receive her RMD for this year? Her marginal tax rate is lower than mine.

I have read rules about 401k plans, rules about the year after death, and a general rule that says that anything not paid to the decedent must be paid to the surviving beneficiaries.

If I don't notify the investment company holding the IRA, the RMD will come out automatically, Mom will be issued a 1099, and I would report the income on her taxes.

I know that starting next year, the RMD will be based on my age.

Thanks for taking the time to read and answer my question.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 09-14-2015, 07:25 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
My mother died earlier this year at age 86. Before her death, she had not received any of her 2015 Required Minimum Distribution (RMD). Can her savings account still receive her RMD for this year?----->>I am so sorry to hear of your mother’s passing;
When your loved one has died and you're the beneficiary of the IRA, then you can take over control of the account simply by presenting the mother’s original death certificate to the bank or other company where the account is being held. But before you do, you'll need to understand the tax consequences of inheriting the account.
Her marginal tax rate is lower than mine.====> You need to pay income tax as the funds are received. UNLESS it is RMDs from Roth IRA . As you inherit a traditional IRA, you can cash out the account at any age , even before you reach age 59½ , without having to pay a 10% early-withdrawal penalty. But you need to pay taxes on the money in the account except for any nondeductible contributions.



I have read rules about 401k plans, rules about the year after death, and a general rule that says that anything not paid to the decedent must be paid to the surviving beneficiaries. =======>Correct; the amount of the IRA distribution , IMEAN Income in Respect of a Decedent, is included in the gross income of the beneficiary for the tax year when it is receivedafter the death of its owner, IRA/401K will be distributed in accordance with the most recent beneficiary designation on file with the retirement plan custodian. If there is no beneficiary designation on file, or if the named beneficiary does not survive the account owner, then the balance of the account will be paid to the IRA owner’s probate estate.

If I don't notify the investment company holding the IRA, the RMD will come out automatically, Mom will be issued a 1099, and I would report the income on her taxes.
===>I think so;As mentioned above; all money that is received from an inherited IRA that has not been previously taxed is taxable as ordinary income when received. as the beneficiary of the IRA that was inherited from your mother, you must include any taxable distributions you receive in your income as your mother deferred paying taxes on the amounts she contributed to the IRA plus any growth in the account over the years it was invested.







I know that starting next year, the RMD will be based on my age. ==>With the Inherited IRA or r-ira, you need to take annual distributions no matter what age you are when you open the account. Since your mother died in 2015, you need to start taking RMDs using your life expectancy by December 31, 2016. So, you don’t have the option of waiting until you are 60 to take withdrawals. Generally, non-spousal IRA beneficiaries must withdraw a minimum amount each year, starting by Dec. 31 of the year after the IRA owner diedThis doesn’t apply if you've simply transferred the IRA to your own IRA.but this option is not for you as you are not a deceased person’s serving spouse. You cannot rollover or transfer the Inherited IRA to your own IRA, because you are a non-spouse beneficiary.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Income received from a client two year after the death of the truster toofan Trusts and Gift Tax Returns 0 03-06-2014 12:01 AM
Decedent's income tax return eastmans Income 2 04-05-2013 09:10 AM
Due to death of earning spouse this year: Posting ad-valorum taxes heybigguy Itemized Deductions 1 12-13-2009 02:07 PM
Who is required to file a tax return for Decedent? Pancho Filing Requirements 1 04-06-2008 04:31 PM
What is going to happen to the 2006 state tax refund? giacomoparente Divorce Tax Issues 1 02-27-2008 04:54 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.