Today TaxMama® hears from Ed in the TaxQuips Forum, who is concerned “I was a beneficiary of my father’s IRA in 2009, after he died. I took out the entire amount at that time and paid the taxes due. Everything I read on the web indicates that I do not owe an early distribution penalty. However my enrolled agent seems to think I do. Can someone please advise if there are circumstances of which I am unaware?”
Do you mean that you took out all the money at the time you inherited it, several years ago – perhaps in 2009? And you paid taxes at the time, but no early withdrawal penalties?
That would be correct. At the time of the draw, the distribution code in box 7 of your Form 1099-R would have been a 4. That means the distribution was taken as a result of a death. Those distributions are not subject to early withdrawal penalties.
So you are correct.
Please read what the IRS says about inherited IRAs. (Or you may already have read it.)
Is your EA saying that you still owe a penalty for 2009? Please ask him to explain why. It’s not clear to me.
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