My client Jane has a beneficial IRA that she inherited from her dad who passed away in 1998. Her dad’s account was at Morgan Stanley and it’s still there. According to Jane and her husband they have never received RMD notifications from Morgan Stanley and therefore they have never taken out any money from the account.
Any suggestions as to how to proceed would be appreciated.
Assuming client was around age 60 at the end of 1999, the IRA would have had to be distributed in around 25 years.19 of those years have now passed, so perhaps she should take a lump sum distribution of the account and file a 5329 form requesting that the penalty be waived. Technically, there would be a 5329 for each year but that would require calculating the balance at the end of each year and the RMD for each year, which would be very time consuming and probably not possible. Since the omission would be self reported and the IRA distributed, the IRS will probably waive the penalty. They know that enforcement of inherited IRA RMDs is almost non existent.
Permalink Submitted by Alan - IRA critic on Thu, 2018-02-01 01:21
How old was her Dad when he passed?