MRD Not Taken For Many Years. One taxpayer passed away.

Hello to all, and thank you in advance for any help you can give me!

New Client this year. She and her late husband have not taken their MRD since 2008. The total amount not taken is about $70K! Their IRA retirement accounts are at a local bank, and they had been using the VITA (free service) to file their previous year's returns.

In 2013 the husband passed away, and the bank had HER take her MRD from her IRA, and then transferred HIS IRA's balance to her IRA, (The husband did not take the final year MRD).

The 2013 1099R the bank issued in her name was correct.

The 2013 1099R the Bank issued in HIS name shows box 1 (gross distribution) of lets say $150K. Box 2 (taxable distribution) also shows $150K. The distribution code shows 4 (death). This was the balance of his account that they transferred to her IRA.

I believe the box 2 amount is incorrect and should be $0. Am I correct?

What should the distribution code be?

Were they even supposed to file a 1099R?

I understand to file amended returns for 2009, 2010, 2011, and 2012. I will show the under-distributions and beg for penalty relief. My bigger question is exactly how does she correct the problems? Will there be any trouble taking the missed RMD (for both of them) from her IRA now that he has passed away?

Does the bank need to do any kind of calculations in HIS IRA for the 2013 (year of death) distribution not taken before they transferred the balance to her IRA?

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mammondee
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