RMD not taken by 12/31 of year following death for inherited IRA
I have a client who inherited an IRA from her mother. Her mother died before the required beginning date for distributions from the IRA. Due to problems with administration of the estate, my client did not receive a distribution from the IRA by December 31st of the year following her mother’s death. Can she still take distributions from the IRA over her life expectancy and pay the excise tax penalty for the missed RMD?
Or is she forced to take the IRA distributions over 5 years since there was no distribution taken by December 31st of the year following death?
Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2013-01-02 23:58
If the estate was the beneficiary, the 5 year rule applies. If client was named directly on the IRA, then she can still establish life expectancy RMDs by making up the missed RMD and paying the 50% tax for the missed year. The IRS agreed to this solution in PLR 2008 11028. She may even be able to push this further by making up the RMD and on the 5329 requesting that the penalty be waived for “reasonable cause” and include her explanation. Worse case the IRS says no and insists on the 50% penalty for any missed years.