The estate of the decedent is not involved with this. The personal representative of the decedent just needs to file the decedent's year-of death tax return to include the distribution that was received before death and was reported on a Form 1099-R sent to the decedent.
Upon the death of the decedent the decedent no longer had any responsibility for the remainder of the RMD because that responsibility transferred to the beneficiaries. The beneficiaries need only to include on their tax returns the distributions they received.
No Form 5329 is to be filed with the decedent's final tax return. Because the year-of-death RMD was satisfied by the beneficiaries by the due date of the decedent's final tax return, no Form 5329 is to be filed with the beneficiaries' tax returns. No explanations are needed. (SECURE 2.0 provides an automatic extension to the due date of the tax return for the beneficiaries to complete the RMD.)
The only thing the beneficiaries should do is keep records showing that they completed the year-of-death RMD in case the IRS questions this, but the IRS is not known to ever do so.
