Important IRA Distribution Tax Traps to Know About

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 20-22

20

IMPORTANT IRA

DISTRIBUTION TAX

TRAPS TO KNOW

ABOUT*1

1. If an IRA owner dies on or after his/ her required beginn ing date,

then a required min imum distribution to the extent unpaid to

the IRA owner must still be paid for the year of t he IRA owner’s

death.

2. According to the IRS, a n unpaid required minimum distribu-

tion for the IRA owner’s year of death must be paid to the IRA

owner’s beneficiary.

3. The required minimum distribution and the unpaid required

minimum distribution amount for the IR A owner’s year of death

is based on the age that the IR A owner would have attained in

the IRA ow ner’s year of death had the IRA owner not died.

4. Many practitioners are not aware of the rules described in items

1, 2, and 3.

5. The IRS authority for the unpaid required minimum distribution

rule discussed above is found at Treas. Reg. §1.4 01(a)(9)-5, A-4 (a):

[I]f an [IRA owner] dies on or after t he required beginning date,

the distribution period applicable for calculating the amount that

must be distributed duri ng the distribution calendar year that

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

* The material i n this section has be en adapted fromThe IRA Di stribution Rules :IRS

Compliance an d Audit Issu es( Product #PTX1202D), published by t he America n Insti-

tute of CPAs. Available at w ww.CPA2biz.com. Copyright 2012, Seymou r Goldberg. All

rights reserved.

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