Non-spouse inherited IRA, taking more than RMD before 59.5 – penalty?
Background: Trad. IRA inherited by non-spouse. Deceased was already taking RMDs, so I know those need to continue over the new designated benef. life expectancy table. Deceased already took out full RMD in year of passing (2016).
Q: Beneficiary is several years under age 59. If they took out more than the RMD, say next year, would they have to pay the 10% early w/d penalty under IRS rules on any amount over and above the RMD that they must take? I know the 10% penalty does not apply to the RMD amount.
I’m looking thru the Ret. Savings Time Bomb book on my desk but cannot locate this corner-case – thank you in advance!
Permalink Submitted by Alan - IRA critic on Thu, 2016-12-08 23:24
There is never a penalty on any distributions from inherited IRAs. The 1099R should be coded “4” which reflects death benefits. The only penalty would occur if the RMD does not meet the requirement.
Permalink Submitted by Robert Bracey on Fri, 2016-12-09 03:26
Thank you Alan for the information! Appreciate the help here as always.