Missed RMDs From an Inherited IRA

Founder of Pierson Wealth Management & Investment Advisor Representative.
Pierson Wealth Management is dedicated to helping individuals maximize their retirement savings and avoid unnecessary taxes and fees, while answering their questions along the way. Understanding the laws surrounding your retirement accounts will help you earn more and keep more of your savings.
Q: I inherited an IRA account, but forgot to take the required minimum distribution for multiple years in a row. Will I have to pay the IRS a large penalty?
A: This is a common occurrence. Many beneficiaries inherit an IRA, but are unaware of rules surrounding RMDs. Failing to take the required minimum distribution results in a 50% penalty on the amount not taken each year. Luckily, it is possible to avoid the hefty penalty. We recommend working with an experienced advisor to calculate the missed RMDs that will need to be taken for each of the missed years. Withdraw these distributions as soon as possible and file IRS Form 5329 for each year missed. Oftentimes, once those steps are completed, the IRS will waive the penalty associated with the missed RMDs. The distributions, along with the RMD for the current year, will be included in this year’s taxable income.
If you have questions regarding your retirement accounts and the rules surrounding them, reach out to us at (661) 297-7566 or submit questions to Ivy@PiersonWealthManagement.com.
Pierson Wealth Management is located at 28368 Constellation Rd., Ste. 396, Santa Clarita, CA 91355. Securities and advisory services offered through Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. CA Insurance Lic# 0C92500.