Year of Death RMD

The RMD the Deceased Didn't Finish

When someone dies after reaching their Required Beginning Date — for an IRA, generally age 73 for people born 1951–1959, age 75 for those born in 1960 or later, and an earlier age for prior cohorts; a 401(k) may allow a non-5%-owner who is still working to delay until retirement — but before taking their full required minimum distribution for that year, the obligation doesn't disappear. It transfers to the beneficiaries.

This is one of the most commonly missed steps in inherited retirement account administration. The custodian won't calculate it for you. The probate attorney usually isn't tracking it. And the deadline is December 31 of the year of death — a date that can arrive fast when weeks are consumed by funeral arrangements, probate filings, and the emotional weight of the loss.

When the Year-of-Death RMD Applies

The obligation exists only when three conditions are true:

1. The original account owner had reached their Required Beginning Date (generally April 1 of the year after their applicable age for an IRA; an employer plan may allow a later date for a non-5%-owner who is still working).
2. The owner died during the calendar year.
3. The owner had not yet withdrawn the full RMD amount for that year before dying.

If the owner died before reaching their RBD, there is no year-of-death RMD. If the owner had already taken the full RMD for the year before dying, the obligation is satisfied.

Partial distributions count. If the owner withdrew $15,000 of a $25,000 RMD before death, the beneficiaries owe only the remaining $10,000.

How to Calculate It

The year-of-death RMD uses the same method the owner would have used:

1. Take the account balance as of December 31 of the prior year.
2. Find the owner's factor using the IRS table they would have used: generally the Uniform Lifetime Table, or the Joint and Last Survivor Table if their sole beneficiary was a spouse more than 10 years younger.
3. Divide the balance by the factor.
4. Subtract any distributions the owner already took during the year.

Example: An 80-year-old dies in July 2026. Assume the Uniform Lifetime Table applies. The IRA balance on December 31, 2025 was $350,000. The table factor for age 80 is 20.2. The full RMD is $350,000 ÷ 20.2 = $17,327. The owner had taken $12,000 before dying. The remaining year-of-death RMD is $17,327 − $12,000 = $5,327.

That $5,327 must be distributed by December 31, 2026.

Who Takes the Distribution

The year-of-death RMD is the responsibility of whoever inherits the account. If there's a single named beneficiary, they take it. If there are multiple beneficiaries, each takes their proportional share.

When the estate is the beneficiary — either because no individual was named, or because the beneficiary designation defaults to the estate — the executor takes the distribution from the IRA into the estate account.

The distribution is reported on the recipient's tax return, not the deceased's final return. Each beneficiary who receives a portion of the year-of-death RMD reports it as ordinary income on their own Form 1040 for the year of death.

One common mistake: a surviving spouse who plans to do a spousal rollover assumes the rollover eliminates the year-of-death RMD. It doesn't. The RMD must be completed before the rollover can occur. Any amount rolled over that includes an unsatisfied RMD is treated as an excess contribution to the spouse's own IRA.

The Penalty for Missing It

A missed year-of-death RMD triggers a 25% excise tax on the undistributed amount. On the $5,327 from the example above, that's about $1,332 in penalties — plus the ordinary income tax owed when the distribution is eventually taken.

The SECURE 2.0 Act provides a correction window: if the missed RMD is taken within two years and the beneficiary files Form 5329 with a reasonable explanation, the penalty can drop to 10%. On the $5,327 shortfall, that's about $533 — still significant, but substantially less than the standard penalty.

The beneficiary can request a waiver by filing Form 5329 with an explanation of the reasonable error and steps taken to correct it. A waiver is not automatic; the IRS decides whether the facts support it.

How to Make Sure This Doesn't Fall Through the Cracks

The moment you learn you've inherited a retirement account, ask the custodian two questions: Had the owner reached their Required Beginning Date? And had they taken their full RMD for the year of death?

If the answer to the first question is yes and the second is no, you have until December 31 of the year of death to complete the remaining distribution. Put this on your calendar immediately — not as a reminder for December, but as a task to handle within the first month of estate administration, before it gets buried under everything else.

The Retirement Account Claims toolkit includes an RMD calculation worksheet that walks through the year-of-death calculation step by step, alongside tracking sheets for the full inherited account claim process.