RMD for bankrupt
Hi,
Circumstances: Husband had IRA that contained one security that went bankrupt in 2010. Husband dies in 2010, no RMD taken. Surviving wife has other IRAs. She is asking if there is any offset of her RMD given her husbands bankrupt IRA (she is bene).
I suspect that her husband’s IRA simply has no RMD since it has no value and then her RMD is whatever it would normally be. Just want to be sure. Any input/validation appreciated.
Thanks!
Permalink Submitted by Alan Spross on Mon, 2010-12-06 20:08
If this was husband’s only IRA account and the assets are worth nothing, then there is nothing that can be distributed for his 2010 final RMD. Surviving spouse’s RMDs are not affected by this as you expected, but she should close the account to avoid any future custodian service charges. To do this, she will have to check with the custodian to see what her options are for disposing of the worthless stock.
Permalink Submitted by mk foss on Tue, 2010-12-07 03:13
If the IRA had a balance at 12/31/2009 and no value before RMDs were due, Form 5329 should be attached to the beneficiaries income tax return to ask that the penalty be waived. There should be no problem in getting a penalty waiver but the Form 5329 will start the statute of limitations running so no one has to deal with an inquiry in the future.