Examples Involving Required Minimum Distribution Penalties

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 17-19

17

EXAMPLES INVOLVING

REQUIRED MINIMUM

DISTRIBUTION

PENALTIES

EXAMPLE 1

Assume that Jack, the IRA owner, failed to receive required minimum

distributions of $20,000 and $22,000 for each of the respective calendar

years 2010 and 2011. In addition, the IRA owner died on July 1, 2012,

without receiving his requ ired minimum distribut ion of $24,000 for the

calendar year 2012.

The designated beneficiary of Jack’s IRA is his nephew, Frank.

Question: Who must receive the requi red minimum d istribu-

tion of $24,000 attributable to Jack’s year of death f rom

Jack’s IRA for the calendar year 2012?

Answer: Frank, the designated beneficiary of Jack’s IRA, must

receive the $24,000 amount that Jack would have

received in 2012 had Jack not died. The authority for

this rule is Treas. Reg. § 1.401(a)(9)-5, A-4 (a), w hic h

states as follows:

If an [IR A owner] dies on or after the required beginning date, the

distribution period applicable for calculating the amount that must

be distributed during the distribution calendar year that includes

the [IR A owner’s] death is determined as if the [IR A owner] had

lived throughout that year. Thus, a min imum required distribu-

tion, determined as if t he [IRA owner] had lived throughout that

year, is required for the year of the [I RA owner’s] death and that

goL88517_01_c01_p001-166.indd 17goL88517_01_c01_p001-166.indd 17 3/12/13 8:27 AM3/12/13 8:27 AM