A final observation (no reply needed, I just need to post to make me feel wrapped-up). From our conversation herein, I've come to believe that there is an OPTION 3 for the example beneficiary's 5329 that is more consistent with all I've learned here.
See, if I had not misread the blog, I might have realized that the executor has no need to know what was distributed ('cuz the estate would not be on the hook for the penalty) and thus would not have requested the beneficiaries share the amount in their box 1 of their 1099R with me: in the absence of one beneficiary stepping up and telling the IRA custodian that they would like to take, say, 100% of the deceased's 2019 RMD, the IRA custodian simply assigned a distribution amount to each beneficiary proportionate to their IRA share and that's all any given beneficiary would know. In fact, the custodian likely wouldn't be able to tell the last 3 beneficiaries that they don't need to take a distribution because that would be passing along information about the other 7 beneficiaries that they aren't entitled to know. So, the fact that I know that the deceased's full RMD was not taken in 2019 , and by how much it was short, and that this particular beneficiary took [more than] the remaining amount of the deceased's 2019 RMD in 2020 is immaterial.
As such, I believe that the beneficiary in question here should file the 5329 as follows: Line 52: $1k (his custodian-assigned distribution share and, incidentally, what he took in 2020); Line 53: $0; Line 54: $0 with the annotation "RC ($1000)." Note that this beneficiary would/should not know that the penalty waiver request is really only on $500 due to other beneficiaries having taken more than they needed to, so all this beneficiary can do is to request the waiver on the custodian-specified amount they didn't take in 2019. An audit, if it came to that, would surface the true 2019 short-fall.
And, along those lines, the other beneficiaries who took no distribution in 2019 should take their distribution in 2020 and file their own 5329 in a similar fashion. I'm not going to take it upon myself [anymore] to advise them, because it is my understanding that the IRS really doesn't care that they didn't take their custodian-specified portion of the distribution but rather cares that the deceased's RMD is taken, and since I know that it [finally] was, it shouldn't matter if they file a 5329 or not. (Technically, they should; in reality, they needn't.)
Again, no reply needed here (unless you are horrified that I veered off course), and thank you so much. I feel like I now understand something in reasonable detail that I'll never need to know again.
