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2002 MRD:
Table III says it is for the IRA owner. Table I says it is for beneficiaries. I took it to mean that my MIL was the owner. If this ditribution is taken in the estate, does the estate pay the taxes at the estate rate - which would be lower since it taxed at the 15% for the first increment of money, then on to the next tax bracket.

The distribution for 2002 is taken as if your mother-in-law was still alive since she was alive on January 1.

Normally, if the distribution were taken into the estate, the estate would pay tax at its rate, but if assets are distributed to the beneficiaries, the income is generally considered distributed first. So, in either case, the beneficiaries will be paying the tax at their rates. This can be a tricky area of tax law and you (more importantly, the executor(s)) should seriously consider seeking professional advice before making any decisions.

Beneficiary IRAs:
I talked to the custodian of the IRA and they were going to send us an inherited IRA form. They said they needed a certified copy of the death certificate.

That's correct. The IRA will be titled something like "[Broker Name] custodian, [deceased name] IRA for benefit of [beneficiary name]" or "[Broker name] IRA custodian, [beneficiary name] beneficiary of [deceased name]"

Annual distributions:
So if things continue like they have for the past year or so. It will definitly be less

Not necessarily. The fractional distribution increases each year (because the life expectancy decreases by approx. 1 year). So, even with a loss in asset value, the actual cash distribution could increase. This is particularly true as one nears the end of one's life expectancy.


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