I had a situation come up last week. My mother passed away in October 1998 (she was 56) and I JUST found out that I was a beneficiary on a traditional IRA. Her husband (not my father) was a lazy procrastinating man who never let my brother and I know about it. He was the executor of her will which I never received a copy of because I was told everything was left to him. Apparently this IRA was to be divided into thirds and since he is not well he is trying to get his finances in order and this came up. I have done all my paperwork and my portion has been moved into account in my name. I have found out that inherited IRA's prior to 2006 had to be distributed within 5 years or risk a 50% penalty. I am sure my mother would not have wanted it to happen this way but what could I do if I didn't even know it existed? How do I handle this situation in 2009? Do I need to go to the IRS (after April 15th that is) and talk to them about it? Do I have to cash in the entire IRA this year? Then I will get a 1099-R for 2009 and I really want to avoid a 50% penalty. So far I have done nothing except move my portion. Could anyone shedd any insight on my situation?
Thank you so much,