Note: This example is prior to the SECURE act that takes effect on $1/1/2020.$ Anyone who inherited IRAs prior to $1/1/2020$ can continue to take distributions over their lifetime.

Joe died on $3/15/2015.$ He had two separate traditional IRA accounts $($IRA$-1$ and IRA$-2).$ The two IRA accounts had the following values$/$dates$.$ Joe was $75$ years old when he died in $2015.$ Joe had not taken his Required minimum distributions in $2015.$ When Joe died, the IRA$-1$ named his surviving wife Jane as the beneficiary and IRA$-2$ named his daughter Sue as the beneficiary. Jane was $50$ at $12/31/2015$ and Sue was $30.$

Joe$$s

DATE IRA$-1$@FMV IRA$-2$@FMV

$12/31/2014$ $$220,000$ $$320,000$

$3/15/2015$ $$200,000$ $$300,000$

Below are the values for IRA$-1$ and IRA$-2$ at different points in time.

IRA $-1($JANE$)$ IRA$-2($Sue$)$

$12/31/2015$ $$140,000240,000$

$12/31/2016$ $$160,000260,000$

$12/31/2017$ $$150,000250,000$

$12/31/2018$ $$120,000220,000$

Part I

Sue did not elect the $5$ year rule for distributions.

$($A$)$ What if any is Sue$$s RMD for $2015?$

$($B$)$ What if any is Sue$$s RMD for $2016?$

$($C$)$ What if any is Sue$$s RMD for $2017?$

$($D$)$ Assume that Sue did not take her RMD for $2017.$ What would be the penalty to Sue for not taking the RMD$.$

Part II

Assume that Jane converted her portion of Joe$$s IRA to her own individual IRA.

$($A$)$ What if any is Jane$$s RMD for $2016?$ Explain.

$($B$)$ What if Jane withdrew $$40,000$ in $2017.$ What would be the tax consequences of this decision.