Decedent RMD
When is the RMD required to be withdrawn from the beneficiary if the decedent didn’t take their RMD in the year of death? Are the rules the same for a 401k as they are for a Bene IRA?
When is the RMD required to be withdrawn from the beneficiary if the decedent didn’t take their RMD in the year of death? Are the rules the same for a 401k as they are for a Bene IRA?
Permalink Submitted by Alan - IRA critic on Tue, 2025-04-01 14:28
The new deadline per the final Secure Act Regs is the end of the year following the year of death, and this will often provide an option for the beneficiary to complete the year of death RMD in either the year of death or in the following year, depending on which year they want to incur the taxes for the RMD.
This rule is the same for both IRAs and qualified employer plans.
Permalink Submitted by Philip Summers on Fri, 2025-04-18 12:21
Good morning, Alan. Can you direct me to the specific IRS interpretation, rule or guideline and the date of this on the change to the year following the year of death for the beneficiary to take the deceased RMD which was not taken prior to their death? Fidelity, the 401k custodian is stating that it is by Dec 31st of the year of death which I believe is not correct. Thank you.
Permalink Submitted by Alan - IRA critic on Sat, 2025-04-19 12:17
The IRS proposed Secure Act rules extended the deadline to the tax filing due date plus extensions for the year of death return. This was effective in 2022. Then, in July, 2024 the final Regs further extended this deadline to the end of the year following the year of death but stated that this additional time was not effective until 2025, which should apply to 2024 deaths.
How does this affect what Fidelity will do? A late RMD penalty waiver is filed by the beneficiary on Form 5329, and Fidelity has no control over that.
Permalink Submitted by Philip Summers on Sat, 2025-04-19 13:38
Ok, thank you. What we are trying to do is get Fidelity to reclassify the 2024 RMD of the deceased father that they sent out in late Nov to be a 2025 distribution and therefore allow for the NUA distribution of the company stock this year (and potentially save the client about $40k in taxes). They referenced in a letter to my client that the distribution had to be taken by Dec 31st of the year of death, so they automatically did it without my client’s authorization or approval. If the final IRS regs were issued in July which was before the Aug establishment of my client’s Decedent/Beneficiary 401k (father died in June 2024) and clarified that he had until 2025 to take his father’s RMD, then we should be able to force them to reclassify the RMD from 2024 to 2025 (my client did not cash the check until Jan 22, 2025). Does this line of reasoning make sense to you, or do you believe that we are fighting an uphill battle?
Permalink Submitted by Alan - IRA critic on Sat, 2025-04-19 17:18
It’s always a battle once a distribution had been made and a 1099R issued. They would have to issue a corrected 1099R with 0’s in the boxes which contained numbers and to avoid doing that they will lean on any available excuse to justify their automatic distribution. If you were to document that the beneficiary had more time, they may well move on to a different reason.
If you want to contest their decision, you could google the 2022 IRS proposed Secure Act Regs. Ignore the final regs, because they do not become mandatory until 2025. The 2022 proposed regs covers 275 pages and on the final page the new deadline (tax return due date plus extensions) is stated and that the applicability of this Reg was in 2022. Therefore, Fidelity could have delayed the RMD until 2025, however their operating procedures evidently called for forcing out this distribution in the year of death. The distribution did not violate any IRS rules, so I doubt that they will correct the 1099R which of course would be required for client to qualify for an LSD for NUA purposes in 2025.
At the time client filed papers as the beneficiary, they could have asked Fidelity to delay the year of death RMD until 2025. Fidelity may or may not have complied with that request.
You could pursue this further by providing this documentation that the year of death could have been delayed into 2025, but even if they agree that it could have been delayed, they are probably not going to correct that 1099R. It may be worth a try however.