RMD Distributed to Owner After Death
My 85 year old client received her 2022 RMD as scheduled last month. Federal taxes of 20% were withheld. Subsequently we learned that she passed away 2 days earlier than the date of the distribution. The client’s son is the 100% beneficiary of the IRA. Does anyone know what the next steps are to address this issue? Is it ok for the deceased client to simply report the RMD on her 2022 tax return or does the RMD need to be returned to the custodian and then reissued to the son?
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2022-05-05 14:34
That would have been the simple solution, but for the withholding which has been credited to client’s account and will become a problem. The custodian’s estate dept should be contacted as they might have a set procedure to address this, but only talk to their resident expert on this situation. Perhaps they will accept the return of the net check and reissue it after son submits the death certificate and establishes his inherited IRA. The custodian would then issue a 1099R including 100% withheld to mother and another 1099R to the son for the balance. The year of death RMD would be satisfied by this. Mother’s final return would use the nominee process to transfer the taxable income to the son, and mother’s estate will have to pay that amount to the son. This will be easier if son is the executor. But check with the custodian first.