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@eastlandtax can you add the dollars involved?    Let's say the investment of $150,000 declines in value to $1,000 as of 12/31/22 at which time the 68 year old who originally made the rollover to the IRA is now 73 and subject to RMD.   In 2023, the RMD is based on the 12/31/22 value and divided by 26.5 from the IRS IRA table.  That means the RMD is now $38.  And before that RMD is distributed, the value of the IRA goes to zero.    What penalty would the IRS assess on $38 - is that the question? is that the magnitude of dollars under discussion? 

VolvoGirl, what about the situation where a 68 year old taxpayer rolls over $150,000 in a 401K to an IRA in 2018.  The contract is that the whole amount is invested by the fiduciary into an investment that pays $6,000 per year in distributions described as "interest on investment."  Initially, the distributions are made regularly but then they stop in the year that the IRA purchaser is required to take an RMD.  But there is no money left in the investment and he does not get the RMD.  The fiduciary sends emails to investors makes a very circular argument that the investment will come back but a sober reading makes it clear that the investment is bankrupt.  Meanwhile, the taxpayer is subject to penalties because there is no way to take an RMD.  As time goes on, it is clear there is no money left in the IRA.  How can the taxpayer obtain abatement of the penalties the IRS has imposed?