95yr old Dad never took his RMD’s from traditional IRA ($11,000) or 401k ($150,000)
While he’s still alive, should we call the IRA/401k’s to see what to do. Or should we wait until he passes? He’s concerned about loosing his money to the penalties.
Terry Says
This is truly an OMG question. There are HUGE penalties for not taking RMDs. Here’s what the IRS website states:
If an account owner fails to withdraw the full amount of the RMD by the due date, the amount not withdrawn is subject to a 50% excise tax. SECURE 2.0 Act drops the excise tax rate to 25%; possibly 10% if the RMD is timely corrected within two years. The account owner should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with their federal tax return for the year in which the full amount of the RMD was required, but not taken.
And surely the custodians of both his 40lk and IRA must have sent him notices reminding him! Do you have any idea how long this has gone on? I would contact the old 40l(k) custodian and ASK them if perhaps they sent the rmds directly to his checking account? Fingers crossed!
If not, I can’t give you tax advice or opine about your next course of action. You need to find an IRS ENROLLED AGENT to help you. Here is a link to the website of the National Association of Enrolled Agents where you can do a search:
https://www.naea.org/naea-education-foundation/enrolled-agents/
