2016 Decedent RMD taken in 2017 by non-spouse benes
My client passed Oct 2016 and left his IRA (no RMD taken in 2016) to his trust that created a separate sub trust for each of the 5 beneficiaries. The attorney has finally given me the necessary legal documents to proceed with getting the decedent’s IRA retitled to the beneficiaries. I know the 2016 RMD will now have to be distributed. My question is…If one of the five beneficiaries takes a full lump sum from his 1/5 of the decedent’s IRA, and it well exceeds the 2016 RMD of the decedent, can the other four avoid having to take their share of the decedent’s 2016 RMD?
Thanks!
Permalink Submitted by Alan - IRA critic on Sat, 2017-05-20 21:22
Yes. For the year of death RMD not completed by the decedent, the beneficiaries can complete that in any proportion because it is a joint responsibility. However, the year of death RMD is still late so a Form 5329 needs to be filed for 2016 requesting the penalty waiver for the reasonable cause of the late year death. It will probably suffice if only the beneficiary who took the lump sum files the form since they have the documentation of the distribution. The IRS will certainly waive any penalty in this situation.