We have a client whose mother passed away at the beginning of the year. She was a beneficiary of her mother’s IRA, and we helped her move the inherited funds into a beneficiary IRA in her name.
Because of her mother’s age, we asked if her mother took her full IRA required minimum distribution for 2024 before she passed. Our client’s answer was, “I don’t know, and if she didn’t then what do I do?”
Per IRS regulation, if an IRA owner dies before their RMD is made for the current year, then the beneficiaries must distribute that amount from the proceeds of what they receive as beneficiaries pro rata by December 31 of the year of death. In other words, if there are three equal beneficiaries, the remainder amount must be split into thirds.
It turns out that our client’s mother still had about $1,700 to distribute from her IRA for 2024 before she passed. This meant that our client and her sibling, both 50/50 beneficiaries, need to distribute about $850 each from their beneficiary IRAs for 2024.
However, be advised that I am not a CPA, and the tax code can change, so always run these kinds of questions by your tax professional.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/ SIPC.
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.