Lawsuit delayed inherited IRA for years…. RMDs?
Parent died in 2018;
lawsuits ensued.
Broker refused to distribute IRA to beneficiaries due to lawsuit.
Lawsuit settled in 2022, IRA distributed to multiple beneficiaries
as inherited IRAs in 2022.
Many RMDs were missed as a result: 2019, 2020, 2021.
Even account balances as of the end of 2018 – 2021 are
hard to know.
What do we need to do to satisfy IRS?
Permalink Submitted by Alan - IRA critic on Thu, 2022-09-15 14:40
If the IRA was frozen since 2018, the custodian should have a record of the year end value for each year thereafter. Once each individual submits needed info to establish their own inherited IRA accounts, each beneficiary should multiply those valuations by the % they inherited, and can then make up each year’s missed RMD, then file a 5329 for each year for reasonable cause to have the late penalty waived by the IRS. RMDs were waived for 2020, so there are only 2 missed RMDs. The divisor must be reset for the 2022 RMD due to new tables effective in 2022. A beneficiary could also elect the 5 year rule if they wanted to avoid the above calculations. The 5 years ends 12/31/2024 as the 2020 RMD waiver included a 1 year extension of the 5 year rule. Beneficiaries are also jointly responsible for completing decedent’s 2018 RMD if that was not done.