Missed Beneficiary of an Inherited IRA question
The beneficiary of an Inherited IRA has not taken 12 years of Required Minimum Distribution. The beneficiary should have started taking the distribution back in 2006. They just became aware that they should have been taking their distribution. What can the beneficiary do at this point?
Permalink Submitted by Alan - IRA critic on Tue, 2018-12-18 17:18
This is another illustration of the IRS having no effective control over inherited IRA RMDs. How much reconstructive work can be done to figure what each year’s RMD was? The prior year end balance is needed to do that, and these balances were provided to the beneficiary each year on Form 5498 or a statement. If the account balance is small enough and the beneficiary old enough, the other alternative is simply to distribute the entire balance of the account. Form 5329 forms to request penalty waivers for all the missed years could then be filed with estimated amounts, hoping the penalties would still be waived since the full distribution obviously made up the late RMDs and the beneficiary still self reported the missed RMDs. In short, there are a few ways to proceed depending on whether the beneficiary wants to try to reconstruct each year’s missed RMD amount or not, and how much the beneficiary wants to retain whatever stretch period is left.