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Inherited IRA, RMD, 5 year rule & excess accumulations tax

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    Inherited IRA, RMD, 5 year rule & excess accumulations tax

    IRA owner died in 2011. IRA was inherited by 2 beneficiaries. The older bene timely created inherited IRA, began RMD's & will continue to do so.
    The younger bene has done nothing and balance of IRA is still in decedents name.
    So the question is:
    #1. Is the older bene now subject to the 5 year rule and
    #2. Assuming the younger bene does nothing before 2017, will the older bene also be subject to the excess accumulations tax.

    #2
    I wouldn't think so.

    If the will splits the IRA between beneficiaries, I would expect that each beneficiary's share would be treated independently.
    Evan Appelman, EA

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      #3
      I agree. It's the younger bene's problem to solve.

      Comment


        #4
        Originally posted by Burke View Post
        I agree. It's the younger bene's problem to solve.
        Thanks for your input.
        This would be my position on the situation also. To Appleman: Since the benes were already designated on the IRA, the will would have no force or effect on this.
        I have studied Pub 590 & of course it is both explicit & murky at the same time. While it details the mechanics of proper procedure, it is non committal on certain aspects of an incomplete split of the account amongst multiple benes with regards to the 5 year rule and excess accumulations.
        If a designated bene drags their feet, it should not poison the correct actions of the other benes.

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