@Opus 17 @dmertz @NCperson @fanfare
Thanks so much for the responses. I believe Opus 17 and dmertz tied for best answer, but everyone who responded raised valid points. For the record, here is how we are going to approach this: Immediately process a distribution from the IRA, payable to my mother-in-law's estate, in the amount of the 2021 missed RMD. The missed RMD is calculated based on my father-in-law's age on his 2021 birthday (even though he had passed prior), and table II of Publication 590-B is used to derive the LE factor due to his spouse being more than 10 years younger. That distribution will be reported on my mother-in-law's estate's 2022 form 1041, which is already required because of other probate action. A waiver of the missed RMD penalty will be requested with that return. The estate will pay tax on the distribution (which I understand to be 37% on estate income exceeding $13,050--which is why you should generally avoid having an estate be the beneficiary of an IRA). Upon completion of that distribution, the balance of the IRA will then be distributed to the estate beneficiaries in the form of inherited IRAs. 2022 and future RMDs will be the responsibility of the inherited IRA beneficiaries.
I should point out that neither the estate accountant, estate attorney, nor the IRA custodian gave accurate advice on how to handle this situation, so "executor beware". The accountant believed my mother-in-law owed an RMD based on her LE, and the custodian went so far as to say that, because my mother-in-law had not taken ownership of the IRA in 2021, her liability was zero and no RMD was required (wrong!). The advice I received here was spot on, I was able to validate this approach against the IRS instructions and feel confident that this is the most correct action to take. Thanks again.
