My basic question: Must penalties be determined (or waivers requested) on RMDs from previous years for a traditional IRA that was just rediscovered *and* fully distributed in 2023 (with 10% withheld), apparently by the custodian unbeknownst to the owner, and for which a 2023 1099-R noting that distribution was issued?
Full story: It appears my relative, whose tax return I'm completing for the first time, forgot he had this IRA. In his past few years' worth of tax folders, I find no documentation or notes on it. Then this year, a year-end statement arrives as well as a 1099-R showing the account was closed and the balance fully distributed, minus a 10% withdrawal. That distribution, presumably in the form of a check, appears to have been lost last fall, and now it's unclaimed property with the state (Illinois). We can file a claim to get that money. The distribution is substantially more than the RMD for 2023, as you might guess.
He and his wife each knowingly had one other IRA account, from which RMDs were precisely taken over the years.
So, do I have to determine the required 2022 and 2021 RMDs, then file Form 5329 plus amended 1040's to face penalties (or request a waiver from them)? Or will the IRS be happy with the big tax payments made and to be made -- the withdrawal last fall plus more taxes with the filing of the 2023 1040? (We don't worry about 2020 because RMDs were not required, and then I'm not worrying about earlier years because the IRS basically doesn't accept voluntarily paid taxes overdue by more than three years, at least per a notice my client once got when we tried to make such a payment.)
