A:

The five-year rule applies only when the IRA owner dies before the required beginning date (RBD). If the IRA owner dies after the RBD and did not satisfy the required minimum distribution (RMD) for the year of death, the beneficiary must satisfy the RMD on behalf of the deceased. The amount must be calculated as though the IRA owner were still alive; this means the amount must be calculated using the uniform life table. The amount must be reported in the name of the deceased and the beneficiary and the tax identification number of the beneficiary.

All subsequent distributions should be calculated on a non-recalculated basis over the life expectancy of the beneficiary or the remaining life expectancy of the deceased, whichever is longer.

This question was answered by Denise Appleby
(
Contact Denise)

RELATED FAQS
  1. If an IRA owner dies after starting required minimum distributions (RMD) but the ...

    If the IRA owner dies after the required beginning date (RBD) and his/her beneficiary is his/her spouse, the spouse beneficiary ... Read Answer >>
  2. How long does an IRA beneficiary have to take an RMD after the IRA holder dies?

    Let's suppose the IRA holder, we'll call him Tom, dies in 2008. If Tom was required to take a required minimum distribution ... Read Answer >>
Related Articles
  1. Retirement

    5 Retirement Plan Moves To Make Before Year-End

    Make sure all your loose ends are tied with these simple reminders and tips for your plans.
  2. Financial Advisor

    Why You Need to Find the Right IRA Beneficiary

    It definitely matters who you pick as your IRA beneficiary—and how you go about it. And in some cases, your best option may be to go with a trust.
  3. Retirement

    Designating A Trust As Retirement Beneficiary

    Designating a trust as your IRA beneficiary can be beneficial, but it requires proper planning to avoid problems.
  4. Retirement

    Preparing For Retirement Plan RMD Season

    Paying taxes is inevitable - that's why you need to learn about the rules for required minimum distributions.
  5. Retirement

    3 Deadlines For Retirement Plan Beneficiaries

    To take full advantage of new RMD regulations, beneficiaries need to take action before important deadlines.
  6. Financial Advisor

    An Overview Of Retirement Plan RMDs

    Make your deadlines for required minimum distributions and save more of your nest egg.
  7. Retirement

    Inheriting an IRA: Tax Rules You Should Know

    Don’t get hit with a 50% penalty because you don’t know the required minimum distribution (RMD) rules for IRA beneficiaries.
  8. Managing Wealth

    3 Steps To Take If You Miss Your RMD Deadline

    If you fail to take the required minimum distribution from your retirement account, you need to take the appropriate steps.
  9. Financial Advisor

    Strategic Ways To Distribute Your RMD

    We give you some tips on preserving your nest egg in the face of unavoidable withdrawals.
RELATED TERMS
  1. Five-Year Rule

    If a retirement account owner dies before the required beginning ...
  2. Required Beginning Date - RBD

    The date by which a qualified plan participant or IRA owner must ...
  3. Inherited IRA

    An individual retirement account that is left to a beneficiary ...
  4. Stretch IRA

    An estate planning concept that is applied to extend the financial ...
  5. Extended IRA

    An IRA that allows a second generation beneficiary to continue ...
  6. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Blue Chip

    A blue chip is a nationally recognized, well-established, and financially sound company.
  3. Payback Period

    The length of time required to recover the cost of an investment. The payback period of a given investment or project is ...
  4. Collateral Value

    The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal ...
  5. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  6. Current Account

    The difference between a nation’s savings and its investment. The current account is defined as the sum of goods and services ...
Trading Center