@Opus 17 wrote:
@ProbablyMike wrote:
It seems like an issue with calculating the historic RMD is, since no distribution was taken, the value of the IRA never decreased for the next RMD and the next and so on. Unless I subtract each RMD from the end of year balance each year. Maybe not reducing the IRA value by calculated RMDs isn't an issue, not sure.
You don't calculate the RMD based on what it would have been if you had taken it before, you calculate it based on the account balance as-is (or as-was).
If you follow @dmertz 's instructions for what you could do, it would be to calculate the RMD for 2008, and report on a 2008 copy of from 5329 that you should have taken that amount, and your penalty is calculated on the form (section VIII). You can download historical forms and instructions from the IRS web site. Form 5329 can be filed by itself because it has a signature line, I don't think you actually have to file a complete amended tax return. You calculate the penalty, but don't send a check. Instead, attach a written statement asking for a waiver. Mail the signed form and attachment to the IRS. Then repeat for 2010 and every succeeding year. (Separate envelopes.) There are probably web sites or tax books that will give you advice on how to write a request for a waiver. One of the things you might say is that you just didn't know that inherited IRAs were not subject to RMDs, and you only started asking questions when you were old enough to take your own RMDs. One thing you should say is that, as soon as you realized the correct procedure, you calculated all your missed RMDs and made a very large withdrawal (in January 2025) and will report and pay tax on it for 2025.
Yes, each of your calculations may be slightly larger than it would have been if you had made the correct previous withdrawals. But that's part of the cost of not making them in the first place, you must withdraw more now to get caught up to be correct.
This is the procedure in the IRS regulations for correcting a missed RMD -- take it as soon as you can, and request a waiver (forgiveness). The only thing different here is the scale, 15 missed RMDs instead of 1 or 2. That's why you might want to go to a tax professional.
