Client died 1/2022, age 97. Spouse (age 90) has not yet transferred acct to her name. Spouse waited to take husbands 2022 RMD until Dec 2023, using deceased husbands age and 12/31/22 acct balance. Client is about to transfer account to her own IRA based on Alan’s info (below) from earlier this year.  When she takes 2023 distribution from her account, should she file amended return and attach a 5329 requesting penalty be waived?

Per Alan-IRA Critic excellent feedback earlier this year:

• The 2022 year of death RMD was taken late, so spouse will have to file a 5329 for 2022 to request the penalty waiver. Further, the 2023 beneficiary RMD was missed, and that means that the spouse has defaulted to ownership status rather than beneficiary. This is fortunate because her 2023 RMD as the owner is calculated from the Uniform Table, which is lower than her beneficiary RMD would have been. But this RMD was also missed so she must make up the 2023 RMD using the Uniform Table and file a 5329 with her 2023 tax return requesting that this penalty be waived. Before she can file the 5329 she must have made up the 2023 RMD.
• She should tell the IRA custodian that she defaulted to ownership due to failing to take the 2023 beneficiary RMD, and the custodian should process an election of ownership, which involves transferring the balance to an IRA she owns. This is not a taxable or reportable distribution, just a transfer. This transfer should be done prior to any distributions, and then she can make up the 2023 RMD and take the 2024 RMD later on this year. If the 5329 forms are filed correctly, the IRS will waive the penalty. Her reasonable cause simply be that she did not understand the RMD rules. Both the 2023 RMD and 2024 RMD will be taxable in 2024.