Tax accounting for decedents distribution after year of death.
Client’s daughter as POA did an IRA distribution to pay nursing home expenses for her parents. Client died 12/28/2021,after the request for distribution in December of 2021. Check was issued on 1/4/2022. Notification of death came on 2/2/2022 after check was cashed. Client called as accountant filing 2022 returns said the transaction needs to be reversed and reportable to the wife. Fidelity advised they cannot unwind and reissue from wife’s rollover IRA. What is the acceptable way to report this income if “final return” was filed for 2021 as the accountant was not ware of this distribution in decedent’s name? Thanks for any insights.
Permalink Submitted by Alan - IRA critic on Tue, 2023-03-21 21:03
The check should have been returned in Feb, 2022 with a copy of the death certificate with request to void the distribution or re issue to the IRA beneficiary. The POA expired on 12/28, but somehow the funds were rolled into the wife’s IRA? Perhaps the executor should file a 2022 return for the decedent showing the 1099R income shifting to the wife by the nominee process, and then the wife reporting the distribution on her 2022 return.
Permalink Submitted by Jay Donohue on Wed, 2023-03-22 14:36
Thanks Alan, I appreciate the insight.