An article published for the Kitces Report outlines how to waive the IRS punitive penalty for failing to take a Required Minimum Distribution (RMD). The following is an excerpt of the Executive Summary:
Tax-deferred accounts have long been a boon to savers, allowing them to earn additional growth on top of the growth without Uncle Sam taking a share. But tax-deferred doesn’t mean tax-free, and sooner or later, Uncle Sam will eventually take his share, since each and every retirement account is subject to Required Minimum Distribution (RMD) rules at some point (even Roth accounts, after the death of the original owner!). Unfortunately, though, the RMD rules can be maddeningly complicated, making it easy for taxpayers to make a mistake by taking a smaller-than-required distribution, taking a distribution from the wrong account (or even the wrong type of account), or (worse yet) missing a distribution altogether. In fact, mistakes in satisfying RMD obligations are so widespread among retirees that in just 2006 and 2007, over a quarter-million individuals failed to take an RMD from their IRAs alone… not to mention all the other types of tax-preferred accounts out there. And given that RMD rules haven’t changed, it’s not a stretch to assume that the number of missed distributions hasn’t gotten any better… especially given that Baby Boomers have since been retiring in droves and reaching the age 70 ½ threshold when RMDs begin.