Missed Inherited IRA RMD
My client inherited an IRA from her mother last year, when mom passed away. Mom was in her 80’s. Mom did not take the RMD in 2022. We transferred the IRA to an inherited IRA in my client’s name. Funds were transferred in the middle of December, but we unfortunately missed sending her the RMD. Before I file an E&O claim, I wanted to see if there was anything we can do to fix this.
Permalink Submitted by Alan - IRA critic on Mon, 2023-01-09 01:49
This is not a problem. The IRS proposed Secure Act Regs extend the deadline for the beneficiary to complete the year of death RMD to the tax due date including extensions. This is effective in 2022. If the 2022 year of death RMD is distributed by 4/18/2023 there is no need to file a 5329 to request a penalty waiver. Therefore, the only tax implication for the beneficiary is that she will have both the 2022 mother’s RMD and her own annual beneficiary RMD taxable in 2023. Client will be subject to the 10 year rule, but will also have to take annual LE RMDs in years 1-9.
Permalink Submitted by Clint Meyer on Wed, 2023-01-11 18:15
Very helpful! Would this be applicable to a spousal transfer IRA. Husband died Nov 22, his IRA was transferred to spouse but regrettably RMD was missed, and not paid out until January 2023.Thank You very much!
Permalink Submitted by Alan - IRA critic on Wed, 2023-01-11 18:56
Yes, this extended deadline applies whether the year of death RMD is taken from an inherited IRA or a spousal rollover IRA account.