Decedant IRA

L1: Decedant IRAA little off the normal questions:
I have a client who inherited an IRA from an unrelated third party – Party A.
Party A died in Dec. ’03. 1/2 of her IRA went to charity and 1/2 to my client. There was a legal mess settling the estate and my client did not gain access to her 1/2 of the IRA until June of 2004.
Two questions:
1 – for calculating my client’s RMD; do I use the Dec. 31, 2003 balance?
2 – since she didn’t have access until June, does she still need to take a full year distribution for 2004?
Thanks in Advance.2004-10-29 12:37, By: Mobey, IP: [67.106.28.17]

L2: Decedant IRAHi Mobey:
Your information is quite incomplete, and your subject can get quite complicated real fast. Besides Bill Stecker’s book you need Ed Slott’s book, “The Retirement Savings Time Bomb … and how to defuse it.” You can link to Ed’s site through the front end of this site, but for convenience usethis link to get to the pertinent part of Ed’s site http://www.irahelp.com/index.shtml
1. Did Client A die before or after her RBD?
2. Since you have two beneficiaries and one is “not a natural person” (charity), there are some real tricky rules to this. Get someone from your back office to help you with this or, better yet, have the client’s CPA do the calculations and determine the needed distributions and when.
3. Having the “non-naturel person” beneficiary along with the natural person beneficiary may cloud the following so I’ll let TheBadger give the difinitive directions here with your case. I’ll tell you about my recent case. Client died in 2002 and before her RBD, but the IRA did not transfer to her husband / beneficiary until 2003, and he was well past 70 1/2 when he took posession. However,he did not have to take a RMD for 2003 since he didn’t own the IRA in 2002 to get an end-of-year valuation for the calculation. His first RMD was for 2004 because he owned the IRA in 2003. Sorry I don’t have the PLR to support this but after much discussion with a fund company, their legal department did the research and came up with the PLR.
Be sure you get some good guidance on this one. Death distributions can be “quick-sand” and turn into a real mess.
Good luck.
Jim2004-10-29 14:28, By: Jim, IP: [68.1.157.228]

L2: Decedant IRAOne more reference recommendation is IRS Pub 590. Go to the IRS site and do a serarch, download and save in your documents file for future reference.
I used this reference to support my argument with the fund company that my beneficiary client didn’t need to take a distribution till 2004, and that prompted their legal office to do the needed research to support my position.
Jim2004-10-29 14:36, By: Jim, IP: [68.1.157.228]

L2: Decedant IRAI have an IRA left half to charity and half to : my client. It was left by someone other than : a spouse.
: The original owner died in Dec. 2003. Her DOB : was April 21, 1933. Her RBD should then be : April 1, 2004.
: The IRA was split in early 2004 and the charity : received their half. I came into the picture : after all of this had taken place.
: My understanding is that my client can take her : RMD over her life expectancy (she has a DOB : of 4-29-37) using table I based on her half : of the IRA at 12-31-2003.
: Question: 1 – am I right? 2 – how does she “elect” to take it out over her life expect. vs 5 year? Is there a form? 3 – other considerations I’ve missed?
Thanks in advance.
2004-10-29 16:27, By: mobey, IP: [67.106.28.17]