Inherited IRA, multiple beneficiaries RMD penalty
My stepfather, siblings and I inherited my mother’s IRA after she passed away in 2016. All but one of us has separated the funds and taken an RMD for 2017. One sibling is waiting for the check to clear into her separated account. She may not be able to take the RMD by Dec 31st. If this occurs, is the 50% penalty only applied to her, or to all beneficiaries? (I am aware that all beneficiaries must take an RMD based on the age of the eldest if all the separate accounts were not established.) The IRS documents are quite opaque and we’ve received conflicting information on this point. Thank you for any clarity you can bring.
Permalink Submitted by Alan - IRA critic on Wed, 2017-12-27 23:43
I assume you are asking about the 2017 beneficiary RMDs, not any year of death 2016 RMD that was not completed in 2016. If so, the beneficiaries that DO create separate inherited IRA accounts by 12/31/2017 can use their own life expectancy for RMDs and are not responsible if other beneficiaries fail to complete their beneficiary RMD. Only the late beneficiary is subject to penalty, although if she makes up the late RMD and files Form 5329 for 2017 requesting the penalty be waived for reasonable cause, the IRS will likely grant the waiver.