beneficiary ira rmd question
ira is at a trust company
originally was the fathers who died when he was 48
and the beneficiary was his 16 year old daughter
they transferred the assets to a beneficiary ira in her name
the trust company says that she does not need to start taking RMD’s as her deceased father was not over 70.5 when he died
i think they are wrong especially with what i read in the tax facts on RMDs to beneficiaries
now ….here is the twist to this
she has not been taking out RMDs for 10 years now since her dad died and she inherited it –
any ideas ?
thanks
bb
Permalink Submitted by Alan - IRA critic on Thu, 2016-03-10 21:44
If she makes up all the delinquent RMDs, she would have to distribute roughly 16% of the average IRA balance over this period. If a 5329 is filed for each requesting a penalty waiver after making up the shortfall, the IRS will almost certainly waive the penalty due to her age. However, unless the balance is very modest, this could result in higher taxes on these distributions since they will all be taxed in the current distribution year. Perhaps she has a cause of action against the trust company or even her financial guardian when this started for the estimated additional taxes. Apparently, this trust company does not have much IRA business because their advice that no RMD was due would have applied had the daughter been a sole surviving spouse beneficiary, so they treated her as a surviving spouse.