Untaken RMD from inherited IRA

Submitted by Steven Oliver on Mon, 2022-05-30 00:25

My father died in 2000 (over 65) when I was 24 and I inherited a standard IRA from him. The first two years, I took the RMD, but then I moved (and got sick and a lot of things fell through the cracks, but that is neither here nor there really relevant except as an excuse) and never updated my contact information for the IRA account. I had sufficient although not high income without the IRA distributions (annual income in the 20K to 30K range shared household, no marriages, filing singly), and forgot about them. I got married 5 years ago and have been filing joint tax returns for the last 5 years (joint income in the 100k-150K range).

How do I clean up this mess? My understanding is that I have to calculate the RMD for the past 22 years and take it as a lump sum now (is this correct?). Do I also have to recalculate and amend tax returns for the past 22 years, or is there a way to make a single IRS filing for this amount. Since I have been filing joint returns for the past 5 years, will I have to divide the calculations into two categories, single filer and joint filer? Thanks, I know this is a mess, but sometimes dealing with legacies can be overwhelming.



Submitted by Alan - IRA critic on Mon, 2022-05-30 01:49

Exactly, how old was father upon his death?  And are you sure that the custodian has not escheated the inherited IRA to the state?

Submitted by Steven Oliver on Mon, 2022-05-30 11:51

Dad was 74 when he died.  I know the IRA is still in my name, because PO forwarding was apparently enough for the statements, just not the checks.   I contacted them to add my kids names as beneficiaries, and was told that I had untaken RMDs.  Hopefully my kids are better at finances than their father.

Submitted by Alan - IRA critic on Mon, 2022-05-30 16:23

  • Since he passed after his RBD, the 5 year rule does not apply. It will be difficult, but you need to attempt to determine the year end value of the account each year starting with the year you first missed your RMD. For example, if you took RMDs in 2001 and 2002, you need the year end balance in 2002 to determine your 2003 RMD. You would divide that balance by 56.2 if you reached 27 in 2003 for your 2003 beneficiary RMD. Continue this process through 2008 reducing the divisor by 1.0 each year. 2009 and 2020 RMDs were waived. The divisor for 2010 would be 49.2, 48.2 for 2011 etc. through 2021 where the divisor would be 38.2. Add up all these RMDs and request a distribution for that total.  It will all be taxable in 2022 per the 1099R you will receive in January.
  • Once you have distributed the missed RMDs through 2021 (omitting 2009 and 2020), then you need to fill out the 4 lines on a Form 5329 for each year (download from IRS site). Be sure you know what goes on each of the 4 lines because it is not intuitive. See the 5329 Inst. Place all these 5329 forms in one envelope with a statement of explanation that you made up the missed RMDs (or your best estimate of what they were) and are requesting that the penalty be waived for reasonable cause (illness, forgetfullness etc). The IRS will usually waive the penalty. There is no need to amend any former tax returns. You may never hear from the IRS, which is good news.
  • For your 2022 RMD, you need to reset the divisor to the new tables effective in 2022. This divisor will be 39.2.Request this RMD separately from the others and this will be included in the 1099R you will receive. Continue to reduce that divisor for 1.0 each year into the future. 
  • The custodian may be able to help you with the year end balances for each year if you do not have any other source. But they probably cannot go back 20 years. You may have to interpolate to fill in the gaps. Year end balances from year to year can change dramatically if this IRA is invested in stocks or stock funds.

Submitted by Steven Oliver on Mon, 2022-05-30 18:33

Thanks for the detailed reply.  I have most of the quarterly statements until they went online. 

Submitted by Steven Oliver on Tue, 2022-05-31 13:12

One last question, for my documentation, do you have a link to the historical life expectancy tables the IRS used, by year?  I haven’t found a good source, since the tax return forms for any given past year only start listing the tables at the age of 35.

Submitted by Alan - IRA critic on Tue, 2022-05-31 15:27

  • The single life table on p 42 of the 2016 Pub 590 B posted below was correct for all these years until 2022.  Remember, once you get your initial divisor for the year after the year of death, you never revisit this table again. Just reduce the prior divisor by 1.0 every year. For 2022, there is a new table in the 2021 Pub 590 B. However, Form 5329 changed a couple times with respect to the line #s. You can download most of these from the IRS website, prior year editions.
  • 2016 Publication 590-B (irs.gov)

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