30 year old CD discovered to be an IRA, What to do???
What to do???
I have a retired mechanic in the family, aged 96. When he retired from his employer at age 65 he was given a $20,000.00 lump sum check at departure.
He went to “A” Savings Bank with his daughter where it was placed into a CD. Nothing more was said except it will roll over every 6 months. There was no awareness of this CD being an IRA or that any RMD was a condition. The daughter that helped him with his affairs is deceased for 18 years.
Now looking after his affairs, it is discovered to be an IRA type of CD which has been rolling over at the 6 month rate from day one. No RMD was taken. What to do???
His sole income has been Social Security. At that level of income he has not filed any income tax return.
He has not received any mail or notice from IRS. Again, what to do???
Thank you for taking this question.
Permalink Submitted by Alan - IRA critic on Mon, 2014-11-24 22:41
Surely, he must have received an annual Form 5498 or equivalent notice of an RMD requirement each year for the last 26 years. There has been no distributions or interest withdrawals ever? The correct approach would be to have the entire IRA distributed to him since reconstructing the actual RMDs would probably not be possible at this point. Then Form 5329 could be filed requesting that the penalty be waived for reasonable cause. What he was provided or not provided over the years needs to be clarified so the facts could be disclosed as the reason for missing all the RMDs. Is the balance under 100K?