What should an executor do if the decedent died before taking a required retirement distribution for the year? – North Carolina

Short Answer

In North Carolina, if a decedent was required to take a retirement plan required minimum distribution (RMD) for the year of death but died before taking it, the executor (or the named beneficiary/trustee, depending on who controls the account) should promptly contact the plan custodian and arrange for the year-of-death RMD to be paid out by December 31 of the year of death. The distribution is usually paid to the beneficiary(ies) of the account (including a testamentary trust if it is the named beneficiary), and it is generally taxable income to the recipient. Because retirement distributions are tax-sensitive, the executor should coordinate the payout with the trustee/beneficiaries and a tax professional before requesting additional distributions beyond the year-of-death RMD.

Understanding the Problem

In North Carolina estate administration, the question is what happens when a decedent dies during a year in which a retirement account distribution was required, but the distribution was not taken before death. The decision point is whether a year-of-death required distribution still must be taken, and if so, who should request it and where it should be paid when the will routes certain investment accounts into a testamentary trust while other beneficiaries receive assets outright. The focus is the executor’s role in preventing avoidable penalties and keeping the retirement account administration aligned with the beneficiary designations and the estate plan.

Apply the Law

Required minimum distributions are primarily governed by federal retirement distribution rules, not by North Carolina probate statutes. Practically, the executor’s job is to identify whether the decedent had a year-of-death RMD obligation, confirm whether it was already satisfied, and then work with the plan administrator to ensure the correct year-of-death RMD is paid to the correct recipient(s) by the deadline. When a trust is the named beneficiary, the trustee typically must provide specific trust documentation to the plan administrator on a set timeline to preserve favorable “look-through” treatment; missing that documentation step can force less favorable payout rules.

Key Requirements

  • Confirm an RMD was required for the year of death: Determine whether the decedent had reached the age/status that triggers required distributions for that specific plan/IRA and whether the year-of-death RMD had already been taken.
  • Get the year-of-death RMD paid out on time: If it was not taken before death, coordinate with the custodian to distribute the year-of-death RMD by December 31 of the year of death, typically to the account’s beneficiary(ies).
  • Coordinate beneficiary/trust administration and documentation: If a testamentary trust is a beneficiary, coordinate with the trustee so required trust documentation is delivered to the plan administrator on time, and avoid requesting extra distributions that could create unnecessary income tax or disrupt the intended trust structure.

What the Statutes Say

  • N.C. Gen. Stat. § 1C-1601(a)(9) (Exempt retirement plans) – North Carolina law generally treats many retirement plan interests as exempt from creditor claims in certain circumstances, which is one reason beneficiary designations (estate vs. trust vs. individuals) matter during administration.

Analysis

Apply the Rule to the Facts: The will directs certain investment accounts into a testamentary trust, with some beneficiaries receiving assets outright and others through a trust structure. If the retirement account’s beneficiary designation points to the testamentary trust (or to individuals outright), the year-of-death RMD generally should be paid to those beneficiary(ies), not “held back” inside the retirement account past the year-end deadline. The executor’s practical task is to confirm whether the decedent already took the year’s required distribution and, if not, to coordinate with the custodian and the trustee/beneficiaries so the correct year-of-death RMD is taken on time and routed to the correct recipient.

Process & Timing

  1. Who files: Usually the beneficiary (or trustee if a trust is the beneficiary) requests the distribution; the executor often coordinates and supplies death certificates/estate paperwork. Where: With the retirement plan administrator/IRA custodian (not the Clerk of Superior Court). What: The custodian’s death-claim packet and distribution request forms; if a trust is beneficiary, the custodian may require trust certification or a copy of the trust terms and a beneficiary list. When: If a year-of-death RMD was required and not taken, request it early enough to ensure it is paid by December 31 of the year of death.
  2. Confirm the payee and tax reporting: Confirm whether the year-of-death RMD will be paid to the trust or to individuals (based on the beneficiary designation) and how the custodian will report it (often on a Form 1099-R to the recipient). Coordinate with the fiduciary/beneficiaries and a tax professional before selecting withholding or requesting additional distributions.
  3. Lock in the post-death distribution setup: Ensure the account is properly retitled as an inherited account (if applicable) and that any trust-beneficiary documentation is delivered by the custodian’s deadline so the intended distribution rules apply going forward.

Exceptions & Pitfalls

  • Assuming the will controls the retirement account: Retirement accounts usually pass by beneficiary designation, not by the will. If the beneficiary designation does not match the estate plan (trust vs. individuals), the executor should not assume the testamentary trust controls the account. For related guidance, see beneficiary designations control who receives retirement accounts.
  • Missing trust documentation deadlines: When a trust is the beneficiary, the trustee may need to provide specific documentation and a final beneficiary list to the plan administrator on a set timeline. Missing that step can cause the trust to be treated less favorably for distribution purposes.
  • Requesting extra distributions too quickly: The year-of-death RMD is often mandatory, but additional withdrawals can accelerate income taxes or conflict with the intended trust administration. Coordination among the executor, trustee, and a tax professional matters.
  • Penalty exposure for missed RMDs: Federal rules can impose significant penalties for failing to take required distributions. When death caused the missed distribution, penalty relief may be possible, but it is not automatic and typically requires corrective action and proper documentation.

Conclusion

If the decedent was required to take a retirement plan RMD for the year of death and died before taking it, the executor should promptly confirm the missed amount with the custodian and ensure the year-of-death RMD is distributed to the proper beneficiary(ies) by December 31 of the year of death. Where a testamentary trust is involved, the executor should coordinate with the trustee so the plan administrator receives required trust documentation on time. The next step is to request the year-of-death RMD through the plan’s death-claim process.

Talk to a Probate Attorney

If you’re dealing with a death that occurred before a required retirement distribution was taken, our firm has experienced attorneys who can help you understand your options and timelines and coordinate with the trustee and plan custodian. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.