Mother-in-law died in Oct. 2023. Wife (age 65) is sole beneficiary of traditional IRA. Bank provided options to address the IRA: A. Take an RMD that has not yet been satisfied (Mother-in-law did receive RMD earlier in the year)
B. Open an inherited IRA (leads us to believe the status of the existing IRA had not been changed), or C. Take a full distribution and close the IRA. We chose C. full distribution with federal tax withholding within 30 days of date of death.
Bank's subsequent 1099-R reflects part 7 distribution code of 4 (death). TurboTax states an RMD was required and imposes a substantial tax penalty on the distribution - roughly 1/3. IRS rules suggest an RMD for my wife was not required until 2024. Is TurboTax handling this situation properly?
