"Eric" <nospam[at]nospam.com> wrote:

- quote -

You don't say how old mom was and whether or not she was
taking required distributions before her death.

If she WAS taking required distributions, then you have a
50% penalty for not taking the 2002 distribution. You can
ask the IRS to waive the penalty.

If she was not taking required distributions, then you have
a few options. One is the five year option that allows you
to wait until 2006 to empty the account. However, there is
a provision in the final regulations that would allow you to
take the 2002 and 2003 distributions this year, penalty
free, and then continue taking distributions based upon life
expectancy. If this applies, take advantage of it. You
must act before 12/31/03.

Barry Picker, CPA/PFS, CFP

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Eric <nospam[at]nospam.com> wrote:

- quote -

It is important to realize that, as a non-spouse
beneficiary, you DO NOT get to roll the IRA into one in your
name. You cannot make additions to it, merely receive
distributions under whichever option you elected (5 year,
lifetime). So yes, the account value to use for calculating
RMDs is what the original account was worth as of 12/31/01
(or half that for a shared inheritance).

Failure to take required RMD in the correct year is
penalized at 50% (yes, FIFTY) of the amount required.
However, if you elected the 5-year option, you are not
required to withdraw anything before the end of the fifth
year after the year of death. You also have the option of
changing your mind and changing the withdrawal election to
one based on your life expectancy (using your age in the
year following mom's death). If that is done, you WILL have
RMDs to consider.

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My mom died in 2001, and I'm a beneficiary of her
traditional IRA. I should have taken my first RMD by the end
of 2002 but didn't. I'm trying to figure the tax penalty for
not doing this, and I need to figure what my 2002 RMD would
have been if I had taken it.

To figure an RMD, I understand that I need to have the
account value for Dec 31 of the year prior, so for my 2002
RMD, I need the Dec 31 account value on Dec 31, 2001. My
inherited IRA account didn't get set up until Nov 2002, so
there's no account to check the value of. I'm thinking of
just using the account value as it was in my mom's name on
Dec 31, 2001. My sister and I are equal co-beneficiaries, so
I'm thinking of just taking 1/2 the account's value.

Comments?

-Eric

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