RMD from Deceased IRA

Submitted by Kevin Hittinger on Fri, 2023-05-12 16:44

We had a client that passed away in March 2023 and did not take their RMD from their IRA for 2023 prior to their death. Can the RMD be taken and distributed to the estate if the IRA had beneficiaries? Or do beneficiary IRAs need to be opened and then the RMDs be completed once the beneficiaries receive the funds in their accounts?



Submitted by Alan - IRA critic on Fri, 2023-05-12 16:54

The beneficiaries own the account upon owner’s death, therefore the year of death RMD must be paid to the beneficiaries, not the estate.  This can be done in any combination, so if one beneficiary wants a distribution large enough to cover the 2023 RMD, the others need not participate. Of course, this takes coordination and communication between beneficiaries. The deadline to complete the year of death RMD has been extended to the tax filing date including extensions for the year of death. If completed by then Form 5329 is not needed to request the penalty waiver.  Finally, the year of death RMD is taxable to the beneficiaries in the year actually received if not received in the year of death. Beneficiary separate inherited IRA accounts must be established to receive this RMD and any other distributions from the inherited IRA.

Submitted by Nicole Hughes on Fri, 2023-12-22 16:58

Hello, would someone please be able to point to the language which allows the year of death RMD to be extended to the tax filing date?

Submitted by Alan - IRA critic on Fri, 2023-12-22 17:25

  • This provision was included in the Secure Act. The following is copied from p 274 of the IRS proposed Secure Act Regs:
  • “(3) Automatic waiver for failure to take required minimum distribution for the year of death. Unless the Commissioner determines otherwise, the tax under paragraph (a) of this section is waived automatically if– (i) A distribution is required to be made to an individual under §1.401(a)(9)-3 or §1.401(a)(9)-5 in a calendar year; (ii) The individual who was required to take the distribution described in paragraph (g)(3)(i) of this section died in that calendar year without satisfying that distribution requirement; and (iii) The beneficiary of the individual described in paragraph (g)(3)(ii) of this section satisfies that distribution requirement no later than the tax filing deadline (including extensions thereof) for the taxable year of that beneficiary that begins with or within that calendar year. (h) Applicability date. This section applies for taxable years beginning on or after January 1, 2022.” 

Submitted by Nicole Hughes on Fri, 2023-12-22 17:31

Thank you very much! So to confirm, this automatic extension is finalized or proposed?

Submitted by David Mertz on Fri, 2023-12-22 19:41

Although the proposed regulations have not been finalized, there is no reason to believe that this proposed regulation will change.  This automatic waiver of the excess accumulation penalty proposed by the IRS relieves the IRS of the burden of processing the bulk of the requests that they would otherwise receive to waive an excess-accumulation penalty, so I can’t imagine that anyone would argue against this particular regulation.

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