RMD in the year of death.
Death of taxpayer Aug. 2011, was required to take RMD’s, failed to take the RMD for 2011 before death. Executor of his Estate also failed to take RMD for 2011.
Question: When filing taxpayer’s final tax return, 1040, must I include the required RMB as income, withdraw the amount from the IRA and pay a 50% penalty for failure to take RMD?
Can I file Form 5329 with the taxpayers final tax return and ask for a waiver of the penalty?
SHR272
Permalink Submitted by Alan Spross on Mon, 2012-03-05 03:27
Sounds like the estate is the beneficiary of the IRA and you are the executor.
If so, the RMD for 2011 should be paid to the estate, and reported on the income tax return for the estate. You can file a 5329 and request a waiver of the penalty for reasonable cause per p 6 of the 5329 Instructions with the estate return. The RMD should be ignored with respect to the decedent’s final income tax return for 2011, as the decedent was not required to take the RMD as of the date of death.
Permalink Submitted by Samuel Robinson on Mon, 2012-03-05 05:12
Thanks Alan but I’m not the executor and the trust is not the beneficiary. I am the accountant preparing the final tax return for the deceased. I will also be preparing the tax return of the estate which will be on a fiscal year 7/31. The executor of the estate sent me the taxpayers info. ( He lived in FLA. I live in PA) and I discovered that the executor had not included the 1099-R for this IRA. When I questioned the missing document, I was told they would investigate and get back to me. It appears that the IRA trustee never sent a 1099-R or a consolidated 1099 for an investment account the taxpayer maintained at the same broker.
SHR272
Permalink Submitted by Bruce Steiner on Mon, 2012-03-05 15:50
Who is the beneficiary? Is the initial poster also the accountant for the beneficiary? It’s the beneficiary who would have to take the IRA owner’s required distribution for 2011 (since the IRA owner did not take it before he died) and his/her own required distributions beginning in 2012.
The initial poster said that “the trust” is not the beneficiary, but there was no prior reference to any trusts.
Why doesn’t the attorney handling the estate get this on track?
Permalink Submitted by mk foss on Mon, 2012-03-05 18:07
The revised answer based on somewhat more information is:
The missed RMD does not go on the final Form 1040.
IRS will waive the penalty if Form 5329 is attached to the return for the beneficiary that includes 12/31/11 AND the missed RMD is taken by the beneficiary before the Form 5329 is filed. If that return is filed before the missed RMD is dealt with, then Form 5329 can be sent in separately – signed by the preparer and beneficiary.
Too often the return preparer has to be the one to get things going when an RMD is missed.