Important Information About IRA Distribution Rules

A report has been put out recently by the Treasury Inspector General for Tax Administration on the need for tax payers to be informed about required minimum distributions for IRAs.  It is common for beneficiaries of inherited IRAs to not be aware of the distribution rules.  If a beneficiary of a deceased person’s IRA fails to follow the post-death required minimum distribution rules then that beneficiary can be hit with IRS penalties. 

The beneficiary should know what to do if the IRA owner passes away without using the full required minimum distribution for the year that they died.  There are specific rollover rules that apply if a surviving spouse is the beneficiary of an IRA.  Special timing and titling rules apply if there are multiple non-spouse beneficiaries of an IRA.  The IRS rules can get really complex if a Trust is the beneficiary, so the trustee should seek out expert advice.

See Seymour Goldberg, What Practitioners Should Know about IRA Distribution Rules, Accounting Today, August 4, 2015.