Didn’t take IRA as beneficiary-Left it in decedents name
I inherited an IRA from my uncle in 1989. Fidelity’s advisor said leave it alone.
I think I’m in big trouble, he passed away before he was required to withdraw.
What do I do now and what will the IRS take from me?
Permalink Submitted by Alan Spross on Sat, 2008-10-18 20:38
An IRA owner who passed in 1989 fell under the proposed 1987 RMD regulations which continued to apply until the 2001 proposed regulations. The default rule for deaths prior to the RBD was the 5 year rule over those earlier years.
Technically, this account should have been drained no later than 12/31/1994, and a 50% excess accumulation penalty would have been incurred as of that date. Tack 14 years of interest on that tax plus the tax on the distribution itself, and there would probably not be much left of the account. About all you can do is file a death certificate, and have the account distributed to you, and then request that the penalty be excused for “reasonable cause”, which are the procedures in place today. If you have any written evidence of the advisor’s blunder, that would probably carry some weight. If not, it may provide you some leverage in a request for the advisor to pick up the tab. If you happened to be a minor in 1990, that may also help your case.
Unfortuneately, it is not possible to predict your chances for relief since this situation is relatively unique, having spanned two decades.