When RMD is deposited into deceased parent's bank account - is it part of estate or do IRA beneficiaries get it?

This is actually a really good question with some nuance. The general rule is that once the RMD hits the deceased's bank account, it becomes part of their estate assets - meaning it would be distributed according to the trust terms among all beneficiaries. The key timing issue is when the distribution was processed. If the RMD was processed while your mom was still alive but simply hit the account after her death, it's still considered part of her estate. This is because the distribution was "in motion" during her lifetime, even if it arrived after her passing. As the named IRA beneficiaries, you and your brother have rights to the IRA itself (its value as of date of death), but not necessarily to distributions that were already in process to her personal account. Those follow the estate/trust rules. You're right to contact the IRA provider ASAP to stop future RMDs. They should be able to halt any distributions that haven't already been processed.

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I just wanted to follow up and say I tried the taxr.ai service that was mentioned after continuing to get nowhere with our estate attorney. I uploaded my grandmother's IRA statements, death certificate, and beneficiary designation forms. Within 24 hours I got a detailed analysis that specifically addressed RMDs that were in process at the time of death. The report explained that since her death occurred before the RMD was processed, those funds should remain with the IRA and pass to the named beneficiaries (not the estate). They even provided the specific references to IRC regulations that govern this situation, which completely contradicted what some of our advisors were telling us. I showed the report to our estate attorney who initially disagreed but then called me back the next day saying he had checked the citations and agreed with the analysis. Saved us thousands in unnecessary estate taxes and prevented a big family argument about who was entitled to those funds.

If you're still struggling to get clear answers from the IRA custodian or your attorney, you might want to try contacting the IRS directly. When my father passed, we had a similar issue with his final RMD that was processed after his death. I tried calling the IRS for weeks but kept getting disconnected or waiting for hours. Eventually I found https://claimyr.com and used their service to get through to an actual IRS agent. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c Within 15 minutes of using Claimyr, I was speaking with an IRS representative who confirmed that post-death RMDs have specific rules depending on timing. They explained exactly how to document everything for tax purposes and sent me the relevant IRS publications that addressed our situation specifically.

I need to eat my words and admit I was wrong about Claimyr. After posting my skeptical comment, I was so frustrated with trying to get IRS guidance on an inherited IRA situation that I decided to give it a shot anyway. I used their service yesterday afternoon, and within 20 minutes I got a call connecting me directly to an IRS agent who specialized in retirement accounts. She clearly explained the rules around post-death RMDs and confirmed that distributions initiated after the date of death should be returned to the IRA and then properly distributed to named beneficiaries, not to the estate. Saved me hours of frustration and potentially thousands in taxes. I've been trying to get this information for over 3 weeks making calls myself. I'm still annoyed that this kind of service needs to exist, but I can't argue with the results.

One important thing nobody's mentioned yet - check if your mom had already satisfied her RMD for the current year before she passed away. If she had already taken her full required distribution for the year, then any additional distributions would have been optional withdrawals. The rules are different for RMDs that were actually required vs. any extra withdrawals she might have scheduled. Required ones that weren't taken before death generally should be paid to the beneficiaries (you and your brother). But optional withdrawals that happened to process after death typically go to the estate. Also, as IRA beneficiaries, you and your brother will need to figure out your own RMD schedule going forward, which follows different rules than when your mom was alive. The SECURE Act changed a lot of these rules in 2019.

Don't forget about the tax implications! If that final RMD went into her account after death, someone still has to pay taxes on it. If it goes to the estate, the estate will pay the taxes. If it goes back to the IRA and then to you as beneficiaries, you would report that distribution on your tax returns. Either way, the custodian will issue a 1099-R for that distribution. Make sure it's issued correctly depending on how you resolve this - to either the estate's tax ID or to you and your brother's SSNs if you're able to have the distribution redirected.