@mjc4maureen wrote:
(2) When you said "your estate files an estate tax return", who is that person? My Will executor? In this case it will be my daughter who is my beneficiary too.
(3) If my last RMD withdraw after my death will be reported on estate tax return, that RMD is added to the estate. As long as my estate doesn't reach estate tax exclusion, that RMD doesn't incur tax consequence. A bit loophole here, isn't it? In other words, no tax paid on that last RMD for this case.
One of the duties of your executor or personal administrator is to file your final tax return. If you have any kind of income after your death, that goes to your estate, which is a separate legal entity that comes into existence when you die, because you are no longer a legal entity yourself at that point. The executor would also be responsible for filing an estate tax return if one was required.
You are correct that there is not always enough money for an estate to be required to file a separate return.
I also need to add an important note, and a significant correction.
A Roth IRA does not have any requirement for RMDs. If you have a Roth IRA, you can leave it alone until you die, and your beneficiaries have 10 years to withdraw it. There is no final RMD requirement for the year of your death. The final RMD rule only applies to traditional IRAs.
And the correction; the final RMD for a traditional IRA does not go to your estate, it goes directly to the beneficiaries and they pay the income tax. See this article, an I apologize for mis-stating the rules.
https://www.kiplinger.com/article/retirement/t045-c000-s004-how-to-handle-taking-a-final-rmd.html
