Discussion:Missed RMD year of death
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Discussion Forum Index --> Tax Questions --> Missed RMD year of death
| 28 May 2008 | |
| Not sure how to handle this - decedent died on 8/29/07. She did not request RMD, 80-something, declining health throughout much of 2007. Does the IRS consider such factors in assessing penalty?
What can be done now? Beneficiary is her three children. Is there any point to requesting the RMD for 2007? Or is that RMD essentially water under the bridge and the RMD starts anew with the beneficiary's life expectancy beginning in 2008? | |
Death&Taxes (talk|edits) said: | 28 May 2008 |
| The problem is more one for the beneficiaries. See Reg. 1.401(a)(9)-5. The beneficiaries should have taken an amount that would have equaled the MD of the decedent, minus any distributions she might have taken in life....in this case, zero. According to Natalie Choate's excellent book, the distribution rules are met as long as any beneficiary takes that amount that should have been distributed in life.
I would attach Form 5329 to one beneficiary's return, without payment of penalty, and with a request for waiver based on facts developed. | |
| 28 May 2008 | |
| If the estate was settled in 2007 I think there is a better than average chance that one of the 3 beneficiaries took a distribution in 2007 rather than establishing a stretch IRA using the decedents name . If so then the distribution rules have been met and Form 5329 is not required.
IRS is extremely understanding in these cases and has a procedure for what amounts to an automatic waiver of the excess accumulation penalty if the MRD was not taken ( See Publ 17 page 124 ) | |
| 29 May 2008 | |
| Cotopop and Death&Taxes - - thanks for your helpful insight.
Cotopop - the estate has not yet been settled/closed. None of the beneficiaries knew about the RMD. Not sure what a "stretch" IRA is. That's why I'm thinking they could still request the RMD that should have been taken in 2007 to show good faith?? I reckon the Custodian could issue the RMD in three equal payments to each of the three beneficiaries. Probably the sooner the better since it's now May/June 2008. | |
| 31 July 2008 | |
| Does the missing of RMDs (in year of death and year after) prevent the beneficiaries (teenage granddaugthers) from taking advantage of the stretch IRA option?
They have finally distributed 2006 and 2007 distributions this year. I just want to be sure that is still an option for them. Obviously a pretty expensive oversight. | |
