How to Take an RMD Before Inheriting an IRA

by Joe Andrews

Often abbreviated as RMD, a required minimum distribution is a mandatory IRA disbursement that must be taken from an IRA annually after the owner reaches 70-1/2. If complications prohibit plan representatives from distributing inheritance money, any RMD currently due may still be paid from the IRA. Legally the beneficiary inherits an IRA the moment the original owner dies and will be liable for all income from a deceased owner’s IRA. There is no way for someone to inherit an IRA without claiming the income from a required minimum distribution currently owed to the IRS.

1. Review the IRA beneficiary designation. If you’re listed as beneficiary, you’re required to claim the disbursement in your name, not in the name of the deceased. If the estate is listed as beneficiary, you’ll need to verify beneficiary information listed on estate documents, such as a will or trust. Whomever is listed as beneficiary of the IRA will be responsible for tax due on the RMD and will legally inherit RMD proceeds. If necessary, RMD proceeds may be deposited in the estate account before the estate representative distributes any inheritance.

2. Request distribution paperwork from the IRA custodian. The IRA custodian is the company holding IRA assets. This is often a mutual fund, brokerage or annuity company. If you’re the beneficiary of the IRA, you’re allowed to complete RMD distribution papers yourself because the estate has no claim on IRA assets. If the estate is listed as the beneficiary of the IRA the estate representative must complete the necessary paperwork and provide documentation of beneficiaries to the IRA.

3. Request an RMD disbursement to the estate or to the named beneficiary. If you’re a named beneficiary, although you may request that proceeds are paid to the estate, you'll still be responsible for taxes due. If the estate is beneficiary, you may request that proceeds are paid to the estate of the decedent. The IRA custodian will send a check payable to the estate which should be deposited in the estate checking account.

4. Disburse assets to the beneficiaries if the RMD was commingled with other estate assets. When the estate representative feels comfortable that most or all claims against the estate have been paid, proceeds from the RMD may be distributed to beneficiaries. If you received a taxable RMD as inheritance, hold some funds in a bank account to pay taxes that will be due on your normal tax filing day. Proceeds from an IRA, including RMDs, are taxed at the beneficiary’s overall tax rate.

5. Determine if the RMD is taxable and pay taxes due. Consult the deceased’s past tax records to determine if he made non-deductible contributions. Use IRS Form 8606 to compute the amount of tax due on the RMD if past contributions were non-deductible.The custodian will send Form 1099 to either the estate or named beneficiary detailing the RMD withdrawal. Search for the code in box 7. This code should be either the numeral 4, indicating death, or 7, indicating normal distribution. If neither of these codes appear, contact the IRA custodian to receive a correct 1099 form.


  • The IRS can easily compare the date of an IRA owner's death to the date of an RMD. Committing tax fraud can result in imprisonment of up to five years and fines of up to $250,000.

About the Author

As a former financial advisor to companies and individuals for 16 years, Joe Andrews knows financial planning and marketing from start-ups to personal budgets. He also writes on motor racing, board games and travel. Andrews received his B.A. from Michigan State University in English. He is currently working on a young adult novel.

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