Missed RMD’s Pre-Secure Act rules.
Hello, I have a client who father passed away in 2019 at age 82 and did not satisfy their RMD in 2019. The son was the only beneficiary of the IRA and would have needed to start RMD’s on their life expectancy starting in 2020. Allegedly, the 2019 RMD was never satisfied and there have been no RMD’s in the IRA BDA from 2020 thru 2025. I thought under the old rules the if the RMD’s were not being satisfied then the IRA BDA may be subject to a 5 year rule and would need to be closed.
Can you confirm if that would be the case? I’m still looking into seeing if the RMD were not satisfied but I wanted to run this be another set of eyes. Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2025-04-15 16:20
There was never such a rule, and life expectancy is the default method for all IRA contracts as far as I know. Beneficiary was also unable to elect the 5 year rule if the death was post RBD.
Therefore, the client has missed completing the year of death RMD and also beneficiary RMDs for 2021-2024. 2020 RMDs were waived. Since the IRS is still waiving the late RMD penalty when missed RMDs are made up and proper 5329 forms filed to request the penalty waiver, it would be wise to make up the late RMDs before the IRS no longer grants waivers. All these distributions would be taxable in 2025 along with the 2025 beneficiary RMD.