Deceased IRA

Submitted by Edward Manowitz on Mon, 2023-08-07 15:39

Clients father died in 2006 and an estate tax return was filed with IRS and California. In 2023 we found out that the deceased had a 401k in the amount of $100k with no beneficiary. The pension people say that we can distribute the 401k ti the two children. The question is do we have to amend the original estate tax returns and is there any penalties associated with not taking the pension distributions since 2006.



Submitted by Alan - IRA critic on Mon, 2023-08-07 17:21

  • Cannot address the estate tax SOL. Strange that these funds did not escheat to the CA controller.
  • Did father pass prior to his RBD, and was not married at the time?
  • These will be lump sum taxable distributions to the children with no possible rollover solutions, but the missed RMD status must be determined before the children can file proper 5329 forms requesting the waiver of late RMD penalties. If father passed prior to RBD, the 5 year rule will apply with a potential penalty for each year starting with 2012, and a 5329 would be needed for each such year. The IRS will waive the penalties though as if the 5329 forms are filed correctly.

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