2023 RMD missed in deceased's year of death (2023). Now what?

[davidsson]

She passed in August 2023 at the age of 93.  I know the rules have changed in the last few years and don't want to make a mistake.

I  found this in Publication 590-B... "If the owner died on or after the required beginning date, the IRA beneficiaries are responsible for figuring and distributing the owner's required minimum distribution in the year of death."  So I assume there are no penalties?

I made the beneficiaries aware (once I found out in January 2024) and believe they need to make RMDs for 2023 as a beneficiary by 4/15/24... but can't find the source for this information (I read it somewhere).  Does this sound correct?

Turbotax asked about info for form 5329 (part IX) that I provided (I explained what happened, that 96% of the RMDs were taken and that the beneficiaries were informed they need to take RMDs).

Do I need to do something else?

Thanks in advance!!

Thanks in advance.

[JotikaT2 · Accepted solution]

Yes, when filing Form 5329, be sure to complete lines 52 (minimum RMD for 2023) and 53 (RMD actually distributed) as prompted.  You will need to enter "RC" and the amount of the RMD that wasn't taken but should have been taken on line 54.  The difference will be reported on line 55 and tax is paid on amounts on line 55.  You will also need to attach a statement letting the IRS know the reason for the shortfall and showing that you are working to remedy the issue going forward.

The IRS will review your information and if they disagree, will send a notice assessing additional tax.  Please see this excerpt from the instructions for Form 5329.

[dmertz · Accepted solution]

The proposed regulations (which have not yet been finalized) published in the Federal Register on February 23, 2022 include § 54.4974-1(g)(3) which provides an automatic waiver of the excess-accumulation penalty if a beneficiary completes the year-of-death RMD by the due date (including extensions) for filing the tax return for the year of death.  If the year-of-death RMD is completed by a beneficiary by this deadline, this regulation makes filing From 5329 to request a waiver of the excess-accumulation penalty unnecessary.  However, it doesn't hurt to file Form 5329 to make the request even if the automatic waiver applies.

[davidsson]

Turbotax completed form 5329, as noted in your directions with lines 52 & 53 completed, the missed RMD amount in the 'Waiver of Tax Smart Worksheet' and a zero in line 54.  The Statement, 'RC' and the amount of the missing RMD to the left of the line 54 entry were completed.

Turbotax left Line 55 blank/empty.

Can I assume the waiver is allowed and leave 55 empty?  I assume that's what Turbotax did?

Thank you so much!!

[dmertz]

Yes, assume that the waiver will be granted.