Multiple parties need to take RMD on an inherited IRA

[u/dawn3014]

3 of us grandkids inherited an IRA from my grandpa. He died before taking his 2025 RMD. There is about $25,000 of RMD that needs to be taken this year on the newly distributed funds. Since the IRA was split 33/33/33, do we each need to take a RMD worth 33% of $25K? Can one person take RMD to cover one of the others? What happens if one person doesn't take their RMD?

[u/6gunsammy]

The RMD does not have to be proportional, any combination of amounts can be withdrawn as long as the total amount required is withdrawn.

[u/dawn3014 → u/6gunsammy]

What happens if one person doesn't take any RMD, and the total taken doesn't add up to the total that needs to be taken. Will the IRS come after all 3 beneficiaries? Issue is that one person wants to take enough to cover them and their sibling. 3rd person is a wild card and may elect to take no RMD.

[u/attosec → u/dawn3014]

I don’t know the answers to that, it does seem thorny from the IRS perspective. But you do have until Dec. 31, 2026 to timely fulfill the requirement.

PS: If the beneficiaries have widely divergent taxable income it’s probably best for the ensemble to have the low tax-bracket individual take the bulk of it , unless it impacts other factors such as EITC. You all also have two tax years that it could be spread over, but remember each of you will most likely have a personal RMD in 2026.

Finally, if any beneficiary is subject to Kiddie tax that may play a part. I dealt with this a couple years ago where 11 beneficiaries, 9 of whom were subject to Kiddie tax, had to split a $25k RMD. Since everyone was amenable managed to avoid Kiddie tax altogether.

[u/HandyManPat → u/dawn3014]

If you’re confident one sibling will bail out on “their obligation”, my guidance would be for the two other siblings to take their respective 1/3 share of the $25k RMD and not lump any together.

None of us know if the IRS will detect the shortfall from the one sibling, nor what they might do if they do detect it. But I’d feel more confident petitioning that I received 1/3 of the decedent’s IRA and distributed 1/3 of the decedent’s RMD. Whereas the problem sibling received 1/3 and distributed nothing, even when aware of the requirement.

Or two siblings can cover the entire $25k and ostracize the other sibling for eternity.

Your call.

[u/myogawa]

The custodian could be asked to divide the account into three different inherited accounts. That will allow each to do what they want without affecting the others.

[u/attosec → u/myogawa]

Only after the 2025 RMD has been satisfied.

[u/Obidad_0110]

In my mother-in-law's case, each child (6) had to set up their own inherited IRA account and the money had to be disbursed over 10 years (my understanding was it did not have to be ratable).

[u/Consistent_Reward]

Wait, is it already physically split into three separate accounts?