Death in an RMD year
Client is 73 years old……Has not taken his RMD…..he dies November 1st……due to delays in processing the beneficiary IRA and obtaining the death certificate, his RMD is not distributed until January of following year. Is the IRS sympathetic to this situation or is the 50% penalty invoked?
Permalink Submitted by Alan Spross on Thu, 2011-09-22 03:56
The IRS will likely excuse the penalty, particularly for late year dates of death. The 5329 requesting that the penalty be waived for “RC” (reasonable cause) should be filed by the beneficiary on the beneficiary’s return for the year of death. Since that return has probably already been filed, the 5329 can be filed on a stand alone basis. The beneficiary should take the year of death RMD as soon as practical and before the waiver is requested so the beneficiary can explain that the late RMD has been distributed.
The beneficiary will then have two taxable RMDs in the same year including his own RMD on the inherited IRA.