Estate Benficiary and taxpayer has not taken RMD
Hi Ed,
I was reading in one of your books when you go into when an estate is the beneficiary.
I have that case currently. The taxpayer died in 2015 and had an IRA worth 1.5 million. We have not taken any RMD’s so far even though the taxpayer was 80 years old when he died. And based on your book, it looks like we should have. The other complication is that the beneficiary of the estate is a charity.
Can you get me thinking in the right direction? And your books are great. I’ve read most of them.
Permalink Submitted by Alan - IRA critic on Fri, 2018-02-09 23:54
This is not Ed, but the executor should have assigned the IRA to the charity before closing the estate. The charity will typically take a lump sum distribution, but it will not be taxable for a charity. Once the charity advises that the IRA has been distributed, the estate needs to file Form 5329 for 2016 and 2017 to request the waiver of the penalty for missed beneficiary RMDs per the last page of the 5329 Inst. With the 5329 forms, the IRS should be advised that the charitable beneficiary has taken a full distribution in 2018 along with stating a reasonable cause for not taking these RMDs. If the taxpayer had not completed his 2015 RMD before passing, the estate was responsible for that as well, and a 2015 5329 should also be filed with the same explanation. Often the IRS will accept these 5329 forms without a 1040X and will typically waive the penalty. If an estate was never opened, please advise.
Permalink Submitted by JERRY ROSENBAND on Mon, 2018-02-12 21:36
Alan, Thanks very much for your quick reply. I have not filed the 1041 yet for the Estate, should I attach the 5329s to the 1041s for 2015, 2016 and 2017 and I’m assuming since the charity was not the beneficiary of the IRA , but the beneficiary of the Estate, I can still distribute the IRA to the charity and there would be no tax.