Missed RMDs – Non-eligible Designated Bene
Client’s son inherited a $250k IRA from his pre-RMD age father who passed in 2018 (pre-SECURE). He has not taken a single RMD until now and is not sure how to address the missed RMDs for years 2019-2023. Does the statute of limitations nullify any of the earlier RMDs? Do we file 5329 and cross our fingers?
Any advise is appreciated!
Permalink Submitted by Alan - IRA critic on Thu, 2024-12-26 16:29
The new SOL based on filing Form 1040 does not apply to years prior to 2022.
Probably the best solution is to reconstruct the missed RMDs for 2019, and 2021-2023, take the distributions and file Form 5329 to request the penalty be waived for “reasonable cause”. The IRS has still been granting these waivers. That would allow the lifetime stretch to continue to spread out the income.
The other option is not positive, but the beneficiary could probably elect the 5 year rule, which would require a total distribution in the next 3 business days, ie by the end of 2024. That would avoid filing the 5329 forms and there would be no penalty to waive, but the tax hit would be devastating.