What happens when you don't take the required minimum distribution?
May 28, 2014 8:42 AM Subscribe
My family, being not financially savvy, bought into a slew of variable annuities in 2000 without knowing what they were doing. My grandfather is now in his 80s and never withdrew his required distribution from his IRA variable annuity. I know the penalty is steep. What can we do?
posted by bluelight to Work & Money (8 answers total)
The IRS says you have to start taking out your required minimum distribution by year 70 and 1/2. Well, it's 14 years later and he hasn't done any of that.
I know there's a crazy steep penalty (50%! holy crap) and I'm not sure what to do now. I just printed out the forms to start doing a systemic distribution withdrawal. But what about all that other money? What happens? Is there any chance of getting the penalty partially waived? My mother blames the market crash for her inaction, but I think it's mostly ignorance and poor English skills (immigrant family).
I am looking for people who have been in a similar situation.
I know I should talk to a tax advisor. Does anyone have any idea how to find a good one? I would literally need someone to paint a road map since I am in way over my head trying to untangle the financial situation of my family. Money is tight.
FWIW, I tried calling the IRS hotline. Not helpful.