Inherited Roth IRA (2008), No Distributions, Missing Statements – What’s the Best Practice?
Hi all!
I have a new client who inherited a Roth IRA from a non-spouse in 2008 (pre-SECURE Act). The deceased and client never took any distributions. We called Ameriprise (the former custodian) and they can only produce statements back to 2017, so we’re missing nearly a decade of year-end values.
- Inherited Roth IRA in 2008 (decedent was under RBD)
- No distributions ever taken
- Custodian (Ameriprise) can only provide statements back to 2017
- Client can try to reconstruct balances from tax returns, old files, etc., but some years may require best estimates
Questions
- Has anyone run into a situation like this before?
- Could we still use the lifetime “stretch” method for RMDs (as would have been allowed under pre-2020 rules for non-spouse beneficiaries)?
- Is it reasonable to estimate year-end values for the missing years (using whatever records or tax returns we can find) to calculate and take all missed RMDs now?
- Should the client file Form 5329 for each missed year, attach a “reasonable cause” letter, and request a waiver of penalties?
- Has anyone gone through this process with the IRS, and if so, what documentation should they provide for any reconstructed balances/estimates?
It’s not a particularly large amount but I would like to preserve the Roth stretch if possible.
Permalink Submitted by Alan - IRA critic on Thu, 2025-10-09 18:40
At this point it would be very work intensive to attempt to make up all the missed beneficiary RMDs. While those RMDs were waived for 2009 and 2020, that’s still 14 years of missed RMDs that must be estimated when needed and withdrawn as a lump sum. 14 years of 1040X forms with Form 5329 would have to be filed to request the penalty waiver, which the IRS would most likely grant.
The only positive is that the large make up distribution will be tax free.
It is highly unlikely that the IRS would question the RMD calculations, particularly since these RMDs would have been tax free. Client just needs to retain some written records of how each year’s RMD was calculated including the estimated prior year end balance and the applicable divisor. The divisor for 2009 from the pre 2022 single life table (even though RMD waived for that year) would be reduced by 1.0 for each year thereafter, then the divisors need to be reset for 2022 and forward to reflect the new 2022 table.
When filing the reasonable cause 5329 forms (same reasonable cause reason for each one), the IRS has been accepting just about any reason. For example, client could simply state that they did not realize that an inherited Roth IRA was subject to RMDs.
Permalink Submitted by Amy Riddell on Fri, 2025-10-10 11:31
Thank you Alan!
When resetting the divisor for 2022, would I use the age of the client at that time and then continue reducing the new divisor by 1?
Permalink Submitted by Alan - IRA critic on Fri, 2025-10-10 12:18
No. The new 2022 divisor is based on client’s age in 2009, then reduced by 1.0 for each year thereafter. That would result in the 2022 RMD being 13.0 less than the 2009 age divisor, 14.0 less for 2023, 15.0 less for 2024 etc.