2025 RMD Question
Hello,
I have a client who was 78 in 2025 and recently passed away. His spouse (RMD age) will be treating the assets as their own but still needs to satisfy the 2025 RMD for the spouse. On 12/27/2024, there was a gross distribution for $230,000. Then on 2/21/2025 the money was put back in the account as a ROC.
Therefore, how do we calculate the FMV of this account for 12/31/24? Do we include 230,000 into the 12/31/24 balance and manually calculate the RMD or would the $230,000.oo just be included in the 12/31/2025 and the spouse would have it included in their 2026 RMD amount?
Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2025-03-17 14:08
The “outstanding rollovers” rule requires that a distribution not in the IRA at year end that is rolled over after year end be added back to the 12/31/2024 balance.
However, this is going to be much more complicated if the 2024 RMD had not been fully completed prior to the 230k distribution.
Had it been completed?
Permalink Submitted by Kevin O'Hearn on Mon, 2025-03-17 14:18
Thank you Alan, The client did satisfy their 2024 RMD before the 12/27/2024 was processed.
Permalink Submitted by Alan - IRA critic on Mon, 2025-03-17 16:42
Good. All that needs to be done then is to add 230k to the actual 12/31/2024 balance.
The spouse can complete the year of death RMD after assuming ownership of the inherited IRA, and should do so this year, which is the last year that a joint return can be filed.
Permalink Submitted by Kevin O'Hearn on Tue, 2025-03-18 09:17
Thank you Alan. So is there nothing to worry about with the fact the $230K will not be on the 2024 5498 tax form?
Permalink Submitted by Kevin O'Hearn on Tue, 2025-03-18 09:24
Sorry Alan disregard my last comment. The 5498 issued in May will capture this. My bad.
Permalink Submitted by Alan - IRA critic on Tue, 2025-03-18 11:24
Actually, it likely will not. While the May report will include regular contributions made through 4/15, there is no such requirement for updating the year end FMV for rollovers completed after the end of the year. Further, unless the custodian held the account from which the distribution was made, they won’t know if that distribution was made before or after the prior year end. Even though this rollover went back to the same custodian, I don’t expect that the year end FMV will be updated by the custodian.
The rollover contribution itself will be reported on the 2025 5498, which gives the IRS a chance to look into any outstanding rollovers when they receive the 2025 5498, which will have a larger rollover contribution amount than distributions made in 2025. And the increase of the reported year end value by the taxpayer will result in a higher 2025 distribution, which the IRS will not question. Therefore, initially the IRS will only be looking for the RMD on the actual (lower) IRA balance, although they will have much more info a year later. That includes the 230k 1099R for 2024 reported as rolled over without a matching 5498 contribution and the 2025 5498 which will show that 230k rollover received in 2025.