My brother & I inherited my mother's IRA in 2017. Her date of death was 11/15/17. I noticed that she did not take her RMD in 2017. What should we do?

Forum|Forum|7 years ago
June 5, 2019
2 replies
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Best answer by dmertz

Assuming that your mother reached age 70½ in some year prior to 2017, upon your mother's death, the responsibility to complete her year-of-death RMD became the responsibility of the beneficiaries. IRA custodians generally require that the IRA be transferred to inherited IRAs for the beneficiaries in proportion to each beneficiary's share. Once the inherited IRAs are established, your mother's year of death RMD can be satisfied from the beneficiary's inherited IRAs in any proportion. Each beneficiary taking part in completing the year-of-death RMD should complete Form 5329 requesting a waiver of the excess accumulation penalty as a result of completing the year-of-death RMD late. The IRS invariably grants the waiver when requested under these circumstances. See the instructions on the last page of the Instructions for Form 5329.

If 2017 was the year that your mother reached age 70½, she died before reaching her required beginning date for RMDs and there is no RMD to complete.

Keep in mind that your mother's RMDs from her traditional IRAs are permitted to be aggregated and the total taken from any one of her IRAs, so if she had enough distributed from another IRA to satisfy the aggregate of her traditional IRA RMDs, her RMDs have already been satisfied. If any of the accounts were 401(k), 403(b), 457(b) or federal TSP accounts, RMDs for those accounts are required to be distributed to beneficiaries before any remainder is rolled over to inherited IRAs for beneficiaries.

D

dmertzAnswer

Level 15

Assuming that your mother reached age 70½ in some year prior to 2017, upon your mother's death, the responsibility to complete her year-of-death RMD became the responsibility of the beneficiaries. IRA custodians generally require that the IRA be transferred to inherited IRAs for the beneficiaries in proportion to each beneficiary's share. Once the inherited IRAs are established, your mother's year of death RMD can be satisfied from the beneficiary's inherited IRAs in any proportion. Each beneficiary taking part in completing the year-of-death RMD should complete Form 5329 requesting a waiver of the excess accumulation penalty as a result of completing the year-of-death RMD late. The IRS invariably grants the waiver when requested under these circumstances. See the instructions on the last page of the Instructions for Form 5329.

If 2017 was the year that your mother reached age 70½, she died before reaching her required beginning date for RMDs and there is no RMD to complete.

Keep in mind that your mother's RMDs from her traditional IRAs are permitted to be aggregated and the total taken from any one of her IRAs, so if she had enough distributed from another IRA to satisfy the aggregate of her traditional IRA RMDs, her RMDs have already been satisfied. If any of the accounts were 401(k), 403(b), 457(b) or federal TSP accounts, RMDs for those accounts are required to be distributed to beneficiaries before any remainder is rolled over to inherited IRAs for beneficiaries.

M

Mark5Author

Level 2

Thank you. Am I correct that we would file this along with a payment for the penalty & if the IRS grants a waiver, they would send a refund? Is this a separate filling or is it included in our turbotax return? would this income then be part of our 2018 tax able income?

K

KurtS

Level 2

Contact the entity that is handling your mothers IRA. Explain the situation. They will ask you for some verification and you will have to fill out some forms. This will take awhile. Once the entity established who the funds legally belong to- they will disburse them. Keep all of this paperwork, including photocopies of the check, copies of any emails, etc. You will need to address this when you file her 2017 return. Because she died so late in the year, your best option is to do two things simultaneously-deal with the entity that handles the IRA and contact the IRS. Hopefully you can get the funds at least "assigned" before you have to file your mothers return so that the disbursement can be noted.

M

Mark5Author

Level 2

She had 3 accounts. 1 was transferred to us last year as inherits IRA’s. The other 2 are in her name. Her accountant filed her return & said she didn’t need to do distribution .