Inherited IRA
If a person does not take the first distribution using the single lifetime tables are the choices:
1. Pay the 50% penalty on what the first distribution should have been and start in year two?
2. Distribute the entire balance within 5 year of death?
Any thoughts?
Permalink Submitted by Alan - IRA critic on Thu, 2019-04-11 18:21
Almost all IRA agreements specify life expectancy as the default option, so the 5 year rule must be elected. In PLR 2008 11028 the IRS allowed a beneficiary to make up missed life expectancy RMDs to restore the stretch, but subject to the penalty for delinquent years. More recently I believe that beneficiaries are making up the missed RMDs, and filing Form 5329 to request the penalty waiver as well and it is being granted. The key to this is discovering the shortfall, taking the missed RMD distributions, and filing the 5329 before the IRS initiates any action.