By Ian Berger, JD
IRA Analyst
QUESTION:
My dad died in December 2025, at age 95. I am the sole beneficiary of his traditional IRA. I just discovered that he never took his required minimum distribution (RMD) for 2025. Will his estate be subject to a penalty?
ANSWER:
Good news! The IRS has extended the deadline for a beneficiary to take an IRA owner’s RMD for the year of death if it’s not taken before death. The beneficiary has until December 31 of the year following the year of death, so December 31, 2026, in your father’s case. It is up to you as the IRA beneficiary – not your father’s estate – to take his 2025 RMD, and you will be taxed on it.
QUESTION:
I have a client who made a contribution to his Roth IRA on April 15, 2026, for tax year 2025. He was over the income limit to make a Roth contribution. Our custodian told us it was too late to recharacterize the contribution. I know we need to remove the excess amount with the earnings. Could you provide guidance on how to go about this? I believe there’s going to be a penalty as well.
ANSWER:
The custodian was correct. The deadline for recharacterizing the 2025 Roth IRA contribution was October 15, 2026. So, the Roth IRA contribution was an excess contribution. October 15, 2026 was also the deadline for withdrawing the excess contribution, plus attributable earnings, without penalty. Since that deadline has passed, your client will be subject to a penalty equal to 6% of the excess contribution for 2025. That penalty must be reported on IRS Form 5329. There will be no 6% penalty for 2026 as long as the excess contribution is removed by December 31, 2026. The distributed excess contribution is not taxable because it was a Roth IRA contribution. Note that attributable earnings do not have to be withdrawn if the deadline for a timely corrective distribution has passed. Another way to fix the excess contribution after the deadline is to leave it there and carry it forward to use as a future-year IRA contribution.
If you have technical questions you would like to have answered, be sure to submit them to [email protected], to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/what-is-the-deadline-for-taking-an-ira-owners-year-of-death-rmd-without-penalty-todays-slott-report-mailbag/