only partial rmd taken in year of death
Death occurred in December and the spouse took only PART of the rmd that went to her qtip trust earlier in the year. There might not be enough time this year for the new beneficiary to take the balance of the rmd, which I believe will be the same amount the spouse would have taken. If it is taken by the beneficiary in January 2011, can it be reported on his tax return based on income received for 2010? There is a big advantage if he can report the income on his 2010 return vs 2011.
Permalink Submitted by Alan Spross on Mon, 2010-12-13 20:43
The income can only be reported for the year is which it is distributed. If decedent did not complete their RMD for the year of death, the beneficiary must take out the amount of shortfall. If this does not get done in the year of death, which is quite common, then it needs to be taken ASAP. The beneficiary should file a 5329 for the year of death if the RMD is not completed and request the penalty be excused for reasonable cause. The IRS almost always grants this request.
But the 5329 can be avoided and the taxes reported in the year desired if the beneficiary can get the RMD completed before year end.