Minimum distributions from IRA for estate beneficiary
I have a client who is an estate. The estate is the beneficiary of the decedent’s IRA. Distributions began before the decedent died, so the minimum distributions for the estate are calculated over the decendent’s life expectancy. The distributions were calculated incorrectly, and not enough was distributed to the estate. Is the estate subject to the additional tax for excess accumulations in the IRA? If so, what form is it reported on? For an individual, it is reported on Form 5329, but it does not appear to be the correct form for an estate filing Form 1041?
Thanks!
Permalink Submitted by mk foss on Thu, 2013-01-03 05:39
Form 5329 is used by a fiduciary as well as an individual. It can be attached to Form 1041 or filed separately if the tax return has already been filed. IRS will often waive the penalty if the missed amounts are withdrawn and a reason for the failure to comply is given. To request the waiver, complete Form 5329 and attach a statement explaining what happened and that the missed amount has been withdrawn.
Permalink Submitted by Kirk Daigle on Mon, 2013-01-07 16:07
do you file the 5329 the year the RMD is taken or the year it should have been taken?
Permalink Submitted by Alan - IRA critic on Mon, 2013-01-07 17:06
For the year it should have been taken. The request to waive the penalty should include the date and amount of the made up RMD in the later year.