Even if you pass away, you must pay your annual required minimum distribution (RMD). Death does not excuse you from the retirement accounts RMD, and heirs will be responsible for it, as discussed in an article from Kiplinger, “How to Handle Taking a Final RMD After Death”.
Even if you have been taking RMDs annually, if you don’t take your yearly RMD before you die the money still needs to come out of the account. Before your heirs are able to take control of the money you’ve left them they will have to take the final RMD. What if it is your spouse who will be assuming the money as their own or another beneficiary intends to retitle the account as an inherited IRA? They still have to pay it. There are few exceptions. If you are curious about any exceptions, contact your family’s estate planning attorney. Before anything can be done with the funds in the retirement account, the distribution must be made.
As an heir, what is your responsibility? Once the owner of the account dies, the beneficiary should contact the custodian and have the funds withdrawn by the regular RMD deadline. This needs to be done before the end of the year in which the owner passes away. No matter how close to the end of the year or far away the owner dies the RMD still needs to be taken. There is a 50% penalty to pay for a missed RMD is the full amount is not withdrawn.
Beneficiaries also need to fill out paperwork, one piece is submitting a certified copy of the account owner’s death certificate to the custodian. Make sure to check with the custodian of each account to learn of their various procedures.
The final RMD along with the tax bill on that amount go directly to the beneficiary and is reported on his or her tax returns. The payments do not pass to the estate. If there is more than one beneficiary, then allocation will be split in line with what’s stated on the beneficiary form. If two primary heirs are named to each receive half of the account’s assets, then the RMD will be split equally between them.
Reference: Kiplinger (October 24, 2018), “How to Handle Taking a Final RMD After Death”