Taxpayer's husband (TPS) died in 2018. At time of death, TPS had a KEOGH plan with a value of $25K. Plan was created in 2000 when TPS received a distribution from the KEOGH held by his professional partnership (the partnership closed and KEOGH funds were distributed). TPS rolled the $300K he received into a new KEOGH at a brokerage. The original brokerage application completed by TPS at the time of the rollover was incomplete. Boxes were left blank. AN EIN was not obtained. Subsequent requests by brokerage that TPS sign plan updates and correct original application were ignored by TPS. TPS did, however, take most of his required RMD's. Two RMD's were overlooked and waiver requests were included with his returns.
The 2018 RMD was taken before death. On advice of her legal counsel, TP (my client) disclaimed the KEOGH in favor of the secondary beneficiary, TPS's son by a prior marriage. TP's attorney notified the brokerage of the disclaimer. When the son attempted to roll the funds into an inherited IRA, the brokerage said they could not do this until plan was brought into compliance. The sent the paperwork to the TP (who is the executor of TPS's estate).
The attorney insisted that the brokerage handle and absorb the cost of taking the plan through the IRS Voluntary Correction Program. After almost of year of back and forth between her and the brokerage, the brokerage firm agreed to absorb the cost, but TP (as executor) must act as adminstrator and complete and sign the paperwork necessary to update and correct the plan and submit a request to the IRS Voluntary Correction Program. The attorney insists that the brokerage must do this, or failing that, the adult son. This issue remains unsettled.
Meanwhile, the 2019 RMD has not been taken. The son cannot take it because the KEOGH plan was never transferred to him by the brokerage. The attorney has indicated that TP has no responsibility to take the RMD. Attorney says she is not concerned about potential penalties because they will be fairly small (plan is only worth $25K).
So who is responsible for the RMD? I am not sure what if anything to tell my client. Although she is acting on the advice of her legal counsel, I am wondering if I have an obligation to remind her that someone should be taking an RMD. TP has not discussed this issue with me directly---I have received this info from the attorney, who seems to want my approval for her actions. So far, I have declined to give an opinion, saying this is a legal matter. The attorney told me that she mentioned to the client that she discussed this with me. That makes me uneasy. I do not necessarily agree with the attorney's actions in this matter. I am wondering if I need to go on record with the client, even though she has not broached this issue with me.