You never pay the 10% early distribution penalty for an inherited IRA - that does not apply. As
@dmertz stated above, the RMD is still required even if the existence of the inherited IRA was unknown. Since the funds were transferred to the state of Oregon, it is not clear to me just HOW the state will report this. Since the state is not a financial institution I have never heard of a STATE issuing a 1099-R. Reporting this might not be simple.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
