Spousal RMD
Taxpayer (husband) dies on December 18, 2018. He is 81 and spouse is 80. His RMD was processed before his death and Insurance company prepared and filed a 2018 1099-R form for taxpayer. Spouse calls insurance company and informs them of his death and transfers the account to her name and sends check back. The insurance company sends her a new check in her name for the 2018 RMD but this all takes place in 2019. In 2019, the spouse will have two RMD’s, one for 2018 (late husband) and one for her in 2019. By the way, this occurred with two separate companies for 2018 that issued RMD’s for the deceased taxpayer. Everything will be picked up in 2019.
Q1 – shouldn’t the 1099-R for 2018 be corrected or voided?
Q2 – should form 5329 be added to the 2018 return requesting the waiver?
Permalink Submitted by Alan - IRA critic on Fri, 2019-05-10 23:32
She should not have sent the check back and the insuranc company should not have accepted it. But since they did she now has to determine what they will do with the 1099R. It they do not want to revise it and are treating the amount as distributed in 2018, with the re issue just being treated as a convenience to help her negotiate the check, this will benefit her because it will keep the 2018 RMD as taxable in 2018 on their final joint return. It will also eliminate the need for her to file a 5329 to request the penalty waiver for the 2018 RMD being issued late. She just needs to verify that they are NOT changing the 1099R issued to the taxpayer. Obviously, she also needs to make sure they mark their records NOT to report the 2018 RMD for both 2018 and 2019 as that would trigger double taxation.