The Inherited IRA Trap Is in T.D. 10001, Page 113

Your parent got a letter every January. Their broker sent it. It told them the exact dollar amount they had to pull from their IRA that year. The deadline. The penalty if they missed it. This is the law. IRS Publication 590-B says custodians must report the required amount to IRA owners by January 31 each year.

Then your parent died. You inherited that same account. The letters stopped.

You are not on a mailing list that fell through the cracks. You were carved out of the system on purpose.

Here is how it works for living IRA owners. You turn 73. Your broker runs the math. They send you a notice. Take this much. By this date. Every year. Simple.

The IRS told brokers to do this back in 2002. IRS Notice 2002-27 made it a requirement. Your custodian has to warn you. The system works. For owners.

Now look at what happens when you inherit that same IRA.

In July 2024, the IRS published its final regulations on inherited IRA withdrawals. T.D. 10001. Big document. Buried in the commentary, the IRS said this:

Right.

Your parent's broker had to send a letter. Your broker? No obligation. Same account. Same money. Same IRS. Different rules for you.

I mean, they wrote the obligation and the blackout into the same document. Same regulation. Same month.

Not every inherited IRA springs this trap. It depends on when your parent died.

If your parent died after age 73, after they had already started taking required withdrawals, you owe annual withdrawals from that inherited account. Every year. On top of the 10-year drain. This is the group that gets no letter.

If your parent died before 73, before withdrawals kicked in, you just have the 10-year window. Empty the account by year ten. No annual pull required. No missing letter to worry about.

The trap is specific. It catches the people whose parents were already in the system. The ones who saw those January letters on the kitchen counter for years. The ones who would most expect a letter to keep coming.

This is not one lazy broker. It is the industry.

STRATA Trust Company holds self-directed IRAs. Their FAQ says it plain:

Sure. RMD. Required minimum distribution. The exact withdrawal your parent got a letter about. You do not get that letter.

Ascensus is one of the largest IRA administrators in the country. They tell their partners the same thing:

I mean.

Two custodians. Two confirmations. The silence is company policy because it is government policy.

For four years, the IRS waived the penalty on missed inherited IRA withdrawals. Beneficiaries did not know the rules. Advisors could not agree on what the rules were. The rules kept changing. The IRS said, fine, no penalty from 2021 through 2024.

That grace period is dead. IRS Notice 2024-35 was explicit. 2025 was the first enforced year. 2026 is now. The clock is live. Nobody sent you a memo.

Make it physical.

Say you inherited a $200,000 IRA. Your required withdrawal for 2025 was $14,000. You did not take it. Nobody told you to.

The penalty is 25% of the shortfall. That is $3,500. To the IRS. Because a letter was never sent.

The average inherited IRA at Vanguard holds $128,000. Smaller than the example. The penalty still bites.

Look, the IRS has been generous when the mistake is honest. Here is the exit.

Take the missed amount now. File Form 5329. On line 54a or 54b, write "RC" for reasonable cause. Enter the shortfall. Put $0 on line 55 as the penalty you think you owe. Attach a short letter. Explain you did not know.

The IRS has a history of granting these waivers when the correction is prompt. This is fixable. But you have to know it is broken first.

Your parent got a letter every January. Exact amount. Exact deadline. The system worked.

You inherited the same account. The IRS wrote the new rules and wrote into those same rules that nobody has to tell you about them. The penalty runs on the gap between what you owe and what you know.

Now you know. That is the entire edge.