Question about RMDs in this situation:
Traditional IRA, original account owner makes a beneficiary change from spouse to non-spouse shortly before passing away (post 2020). Original owner was not required to take RMDs themselves before they passed.
Beneficiary change is being disputed in court. IRA custodian freezes the original IRA account pending court order resolving dispute. Account is still titled in original owner (decedent)’s name, it has not transferred into an inherited IRA account though the non-spouse remains listed as beneficiary.
Prior to resolving the beneficiary dispute, is non-spouse required to take RMDs on this IRA? The SECURE Act focuses on the death of the account owner, but if the assets are not yet transferred to an inherited Ira for the named beneficiary, and the original account is effectively frozen for the moment, does that make a difference?
Inherited IRA RMDs with contested beneficiary
byu/Select-Chemistry-360 intax
Posted by Select-Chemistry-360
2 Comments
Since the IRA owner died prior to RMD requirements, the non-spouse beneficiary would not be required to take RMDs in years 1-9 of the 10 year payout period even if the beneficiary issue was undisputed.
A key mistake is assuming RMD obligations pause just because the acount is frozen or still titled in the decedent’s name, the 10-year clock can start at death regrdless of court delays. Another risk is waiting for clarity before planning, penalties don’t always care about disputes in progrss. If the case drags on, what’s your plan if missed RMDs are later deemed requird anyway?