RMDs when a decedent’s IRA disputed after death
A woman had an IRA naming her divorced husband as beneficiary (never changed beneficiary). She died before changing beneficiary from divorced husband to estate. Executor of woman’s estate brings a court action to change beneficiary to estate and wins the case. The case took two years to litigate. The woman reached her required beginning date and was taking RMD until death in 2012. The case was settled during July 2014 with no RMDs for 2012 after date of death and 2013+2014.
Question: Would the estate be required to take RMD for 2012+2013 since ownership of IRA was in dispute and no one knew who would end up owning the IRA?
Thanks,
Ron
Permalink Submitted by Alan - IRA critic on Tue, 2014-08-05 23:44
Yes, the estate must take the year of death RMD for 2012, then calculate the estate’s own RMDs for 2013 and 2014. The total will be taxable to the estate in the year distributed. Form 5329 should be filed for each year to request waiver of the excess accumulation penalty for the 2012 and 2013 RMDs citing the litigation as the reasonable cause for the delay.