Inherited IRA RMD not taken. | Ed Slott and Company, LLC

Inherited IRA RMD not taken.

My sister in law failed to take this year's RMD from an inherited IRA (about $2,000) that is fully invested in Vanguard mutual funds which will not be able to be withdrawn until the 2nd. What is the process for requesting an exemption from the 50% penalty and what are the chances that she is granted it?

She should file Form 5329 with her 2018 tax return requesting the penalty waiver for reasonable cause. If the 5329 is filed correctly, the chance of the IRS granting the waiver is close to 100%. There are only 4 lines on the 5329 but they cannot be completed intuitively. She should carefully read the last page of the 5329 Inst before completing the form. The explanation can be as simple as she forgot, but if there are better reasons such a medical problems or custodian error she should use the best reason. She should also be sure the late RMD has been made up before filing the form, so she can state that the RMD has been made up.

Very helpful. Happy New Year.


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