no RMD’s ever taken- need advise of what to do
My mother passed in 2006 and the company that hold the inherited IRA never told me I needed to take year distributions. My financial advisor also never told me even though I told them I had it. My tax accountant never told me either, and they knew I had the Inherited IRA. How do I know go about getting square with my tax obligations?
Permalink Submitted by Alan - IRA critic on Sat, 2016-12-17 23:05
It will take some work. Before replying to your question, did your mother pass before 4/1 of the year following the year she reached 70.5, or after that date? Were you named as the beneficiary on the IRA or was her estate the beneficiary? If you were named, were you the sole beneficiary? Finally, is this IRA less than 30?
Permalink Submitted by Dd adams on Tue, 2016-12-20 00:43
My mom passed away at 80 years old. I was one of the beneficaries, it was divided between 3 of us. I havemy name on the IRA and not once did Neuberger Berman tell me I had to take money each year. I have called them a couple of times trhough out the year and now all they say is talk to you financial advisor. My financial advisor and my accountants never told me anything either. I am assuming that you mean less than 30 K. I believe it came to me in 2007 as 70K went all the way down to 32K in the crash and now is at 104K. I will be happy to know who I can talk to and help me out of this and pay the right amounts in taxes-but honestly no ever said anything to me about having to take out the money.
Permalink Submitted by Alan - IRA critic on Tue, 2016-12-20 03:19
You should probably take action to save your life expectancy stretch as allowed per PLR 2008 11028. It sounds like the inherited IRA was divided into separate accounts by the deadline for you to use your own life expectancy for RMDs. But you have to be able to calculate each RMD (RMD were waived for 2009) starting in 2007. Your divisor from Table I is based on your age as of 12/31/2007. Then for each year after 2007 reduce the divisor by 1.0. Count 2009 for the reduction but do not calculate an RMD for 2009. Of course you need to know the year end balance of the IRA for all these years except 2008. Add up all the RMDs and take the total distribution. Once you have done that, you can file a 5329 for each delinquent year asking the IRS to waive the penalty for “reasonable cause”. Since you will self reported the late RMDs and taken out the entire amount, the IRS will almost always waive the penalty. You need to download the 5329 edition for each year which you can do on the IRS website. Note that this total distribution is taxed in the year you receive it. Feel free to post additional questions as you face them.