2022 RMD on deceased mother

Submitted by Douglas Bauerband on Wed, 2022-11-30 20:27

Clients Mother passed away on Nov 20th, 2022. Her RMD came into her checking account on Nov 30th.

To finish her RMD for 2022, her last payment will be December 26th, 2022.

Questions:
1. If we stop the RMD for December, and the account does not get corrected until Jan ’23, what happens to the RMD balance for 2022?
2. does someone pay a penalty since it was not taken out if “22 or can the balance come out in ’23 for ’22 with no problem?

Thank you very much
Douglas



Submitted by Alan - IRA critic on Wed, 2022-11-30 20:58

  • The automatic distributions should be stopped ASAP, and the custodian may need a copy of the death cert to do so.  As of the DOD of death. the responsibility to complete the year of death RMD falls to the beneficiaries. The proposed Secure Act Regs extend the time to complete the RMD by beneficairies to the tax filing due date plus extensions. Therefore, the beneficiaries have some time to spare, and the flexibility to determine which year the taxable income will be reported in.
  • Note that the recent distribution occurred after the DOD, and is therefore due to the beneficiary, not to the estate of the decedent whose beneficiares could differ. The taxable income (1099R) should conform to the recipient of the funds, but the custodian will not break out the last payment on a different 1099R. If the parties wish to be technically correct, they could use the  nominee process on decedent’s final return to back out that last payment and the beneficiary would then report it. This added hassle can become a by product of automated distributions that are not terminated immediately upon the owner’s death.

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