Inherited IRA

[delaney]

Client inherited an IRA when her mother died in 2002. Got 1 distribution in 2003 and nothing since. What do we do now? Do I take the 2004-2007 distributions out this year and pay the penalty on the 2004,2005 and 2006 distributions? I also read I can apply for an abatement on the 50% penalty.

Or, does she have to take it all out now in year 5 because she didn't take them annually?

Just want to make sure that I am understanding the rules correctly.

Thanks again.

[Kram BergGold]

My take

Either your client set the IRA up in the proper way to take yearly distributions over his or her life expectency, in which case penalties are owed for not taking the minimum distributions in 2004-2006 or this was not done and all the money has to be removed within the 5 year time period. I have not researched this. This is just me being logical which is not always the way to go.

[ED SMITH]

If the daughter had the IRA transferred into her name then the entire amount has to be taken out by the end of year 5.

If the IRA was left in the mother's name, then the distributions have to be taken out according to the single lifetime table and whether or not the mother had taken RMD prior to her death. There would then be penalties for the years in which no RMD was taken.