RMD in inherited IRA
When someone passes away at the end of the year and the funds are not “inherited” or moved until the following year. If the former owner did not take an RMD in the year they passed and the inheritors satisfied the RMD in the following year, will there be a penalty assessed by the IRS?
Permalink Submitted by Alan - IRA critic on Tue, 2022-11-08 16:40
There will be no penalty as long as Form 5329 is filed properly. However, the new proposed Regs effective in 2022 provide an automatic waiver of the penalty if the year of death distribution is taken by the due date plus any filed extension. If completed by these dates, Form 5329 is not required, but documentation of the distribution date should be retained in case of an IRS inquiry.