Missed RMD on beneficial IRA
I have an elderly client who failed to take her RMD from her Beneficiary IRA in 2016 and subsequently passed away in early 2017. Am I reporting the missed distribution on the 2016 income tax return? Assuming the distribution will have to come from the beneficiary IRA, what’s the process to handle the 1099 to be issued for 2017 when filing 2017? Any thoughts would be appreciated.
Permalink Submitted by Alan - IRA critic on Thu, 2017-09-14 18:04
Only the recipient of a distribution reports distributions and will get a 1099R. You will have no distributions to report on the client’s 2016 return or final 2017 return. Her successor beneficiary is responsible for her 2017 (year of death) RMD, but not for her 2016 RMD. If your client inherited this IRA from her spouse, please advise since failing to take an RMD as a sole surviving spouse beneficiary results in the client becoming the deemed owner of the IRA and that would change the RMD amount.