RMD not taken

Submitted by john williams on Fri, 2016-09-02 21:16

I have a client whose Mother died last year at 87. The children discovered a missing IRA worth 150k. The Mother never took an RMD, she probably didn’t even know about it.

Would you go back and file 5329’s for 17 years?

Maybe just amend last 3 years?

What do you think?



Submitted by Alan - IRA critic on Sat, 2016-09-03 03:12

  • Client should just take the year of death RMD and file a 5329 to request the penalty waiver because the year of death RMD was due 12/31/2015.  Both the year of death RMD and the first year beneficiary RMD will be taxable in 2016.
  • IRS Regs require the beneficiary to complete the year of death RMD, however in practice the IRS seems to be interpreting the year of death RMD to be limited to the RMD for that particular year. Technically, per IRS Reg 1.402(c)(2) Q 7, which likely applies to IRAs as well as qualified plans because IRS Regs do not state otherwise, an RMD not taken in a prior year is added to the next year’s RMD. Therefore, the IRS COULD assert that all those missing RMDs are included in the year of death RMD, but they have not been doing that. They have accepted the notion that the year of death RMD only means the RMD generated for that single year without adding prior delinquent RMDs.

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