50% penalty for missed RMDs on inherited IRA

Don't forget that there are additional rules in cases where there are multiple beneficiaries.

I have actually only dealt with five of these: Two were taxpayer illnesses; one was caring for an injured son; two were missed first RMDs (i.e., t/p had turned age 70.5 and missed the 4/1 deadline for the first RMD). In all cases, the t/p had made the corrective distribution before we filed the 5329 and request for waiver. All five were accepted for relief. In all cases, the corrective distribution was made before the end of the next tax year. I do know that there is absolutely no relief without a corrective distribution before the request for relief is sent.

I have never had a tax pro tell me that ignorance of the law or I was confused by the tax code was accepted by the IRS as an excuse. I have never run into a trustee who when face to face with the beneficiary showing up with the death certificate failed to explain the options available to the beneficiary.

Lastly, it is my understanding that ever since a TIGTA report (I think it was late 2010 or early 2011) that dinged the IRS for failing to administer the RMD rules properly (~40 % of RMDs were being missed) The IRS has started to crack down.

Thank-you. Yes, I imagine it's more than just an innocent oversight, and hope you're right that the trustees are doing their jobs.

I can't speak for all trustees, but I have dealt with the major banks and the large discount brokers and they all explained the options to the non-spousal and spousal beneficiaries. Generally, I found that the banks wanted to keep the accounts by opening up beneficiary IRAs and the brokers seemed to want to close the accounts. But then again, those accounts were not very large.

I helped a friend with it, and everything worked out OK. The instructions say pay the penalty and request a refund, but I just wrote a letter requesting a waiver of the penalty. I also had him immediately take the late RMD.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

That rule was changed several years ago IIRC, no longer necessary to pay first before requesting waiver.

My experience with banks in these maters is they are complete idiots who don't know the law or their own internal procedures.

JoeTaxpayer wrote in news:ks90tk$vuq$ snipped-for-privacy@dont-email.me:

I have a friend who works in the IRS as a CSR. He says that this waiver is granted the first time for each person. After the first time, though, more scrutiny is involved.

Dee