Beneficiary did not Take MRD before rolling IRA to Beneficiary IRA
IRA Owner, aged 73, dies on January 1, 2018. The executor transfers the balance to the two (non-spouse) beneficiaries into beneficiary IRAs a few months later but the executor neglected to take out the original owner’s 2018 MRD before doing that. How does the executor (who is one of the two beneficiaries) correct the missing MRD now that there is no longer an original owner IRA? Can he simply take it out of his own beneficiary IRA? How does he communicate to the IRS that that distribution is for the original owner’s 2018 MRD? Assume the other beneficiary is uncooperative and out of communication with the executor.
Permalink Submitted by Alan - IRA critic on Wed, 2018-12-19 20:32
Since the year of death RMD is a joint responsibility of the beneficiaries, in a case like this the executor should distribute the entire year of death RMD from the executor’s inherited IRA. There is no need to flag the distribution to the IRS as a decedent’s final RMD. If the IRS ever asks the executor can provide documentation, the the IRS is rarely if ever asks. In fact, a decedent’s RMD will rarely come out of the original inherited IRA because almost all IRA custodians will transfer the balance to a new account under the TIN of the IRA beneficiary, preferring to only have one TIN per account. If the executor takes this distribution before year end, it will not be late and Form 5329 will not be needed to request a penalty waiver.