Inherited IRA Life Expectancy Payment

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  • #5123

    A friend of mine’s father died in 2018 and had named his son as beneficiary. The son has still not set up an Inherited IRA and transferred the account balance. He did not withdraw any funds in 2019. Does he have a tax issue?

    #5126
    Alan S.
    Participant

    Yes. He must submit a copy of the death certificate and his other contact and SSN info to the custodian to have the inherited IRA retitled showing father’s name as decedent and his as beneficiary. If he wants to he can then do a direct trustee transfer to another IRA custodian.

    If his father was RMD age and did not complete his 2018 RMD, the son is responsible for determining the shortfall and must complete that RMD in addition to the 2019 beneficiary RMD for himself. All distributions will be taxable in the year they are distributed. He must also file Form 5329 requesting the waiver of the penalty for being late, but can only file these forms after the late RMDs have been distributed to him. If his father did not complete the 2018 RMD, he must file a 5329 for both 2018 and 2019. He must provide a reasonable cause statement with these forms, but the IRS will normally grant the penalty waiver. I assume he was the sole beneficiary of this account, if not please advise.

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