Ask Terry Questions RMD required not fulfilled due to death

RMD required not fulfilled due to death

By Terry Savage on January 24, 2019 | Wild Card

My husband died on Oct. 10, without having taking his RMD for 2018. Because his death certificate said the cause was under investigation, his 401K was frozen. I could not ask for the RMD. It took the medical examiner 2 1/2 months to issue the final certificate and I now have access to the beneficiary account. Should I take last year’s RMD right now? I am hoping to avoid the 50% penalty due to extenuating circumstances .. Thank you.

Terry Says

This was such an unusual — and significant — question that I turned to the ultimate expert for an answer.  Ed Slott of trains professional financial planners in the details of IRAs.  In fact, on his home page, there is currently a long article addressing exactly this situation.  Here is his response to your specific question, but do read that article, as well.:

Answer: Yes, take the missed year-of-death RMD right now.

As you know there is a 50% penalty for missing an RMD, even if you are dead!

Death gets you out of pretty much everything in the Tax Code – except  RMDs.

But that 50% penalty can be waived by requesting a waiver from IRS. This is done by filing Form 5329 with your tax return.

But first you must take the missed RMD. You do that now, in 2019, even though it is for 2018. Once a person has died, the account belongs to the beneficiary so the beneficiary is the one responsible for the year-of-death RMD not taken. The beneficiary is also the one subject to the 50% penalty. That’s why it’s the beneficiary who must file Form 5329, not the deceased IRA owner.

IRS will not automatically waive the penalty. You must ask, and you do that by filing Form 5329. You need to attach a statement saying that you made up the missed RMD as soon as you could, and then provide a reason why the RMD was not taken. Death is an acceptable reason and IRS will likely waive the 50% penalty.





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