December 1, 2021 – The question of who must take the year-of-death RMD is tricky. This client’s question has an interesting twist because RMDs were waived in 2020.
The answer is relatively straightforward. If the IRA owner did not already take the year-of-death RMD before death, it must be taken by the beneficiary. It is not paid to the owner’s estate unless the estate was named as the beneficiary. By law, the minute an IRA owner dies, the balance of the IRA belongs to the beneficiary, NOT the estate. The beneficiary will also pay income tax on the year of death RMD on their personal income tax return.
In this particular case, since RMD’s were waived for the tax year 2020, none are required. RMD’s will start in 2021. Please get in touch with us with any questions, and feel free to pass along this information to family or friends who may be interested.