Inherited IRA – No RMD’s taken to date
The client, age 60 died in 2007 leaving her son (22) as sole beneficiary. Son opened Inherited IRA in 2008. To date he has not taken any distributions. What are his options at this point?
The client, age 60 died in 2007 leaving her son (22) as sole beneficiary. Son opened Inherited IRA in 2008. To date he has not taken any distributions. What are his options at this point?
Permalink Submitted by Alan - IRA critic on Thu, 2016-12-01 17:54
What is the approximate amount of the IRA, and does someone have a record of the year end balances in order to calculate the life expectancy RMD for each year? Would son like to stretch this as long as he can?
Permalink Submitted by Sandra Owens on Thu, 2016-12-01 18:16
Account balance today is $217,400.03. Yes – we have a copy of every statement and yes – the son would like to stretch this as long as he can.
Permalink Submitted by Alan - IRA critic on Thu, 2016-12-01 19:04
Then he might proceed by calculating the actual RMD for each year (except 2009 when RMDs were waived). Then request a distribution of the total amount including the 2016 RMD ASAP, hopefully before year end. Note that this entire distribution will be taxable in 2016. He would also have to request the penalty waiver for 2008 and 2010-2015 using Form 5329 edition for each year. Note that PLR 2008-11028 states that he can restore the life expectancy stretch, but that taxpayer had to pay the penalty. However, there is a good chance the IRS will waive the penalty for reasonable cause if he self reports the delinquencies on a proper 5329 after making up all the late RMDs. He should be able to bundle the past year 5329 forms together without a 1040X for each year, but every so often an agent will return them and ask for the 1040X even though it serves no purpose with a 5329..