Missed an Inherited IRA RMD? The Penalty, the Tax, and the Medicare Bill Nobody Expects

A widow turns 76 the year after her husband dies. He was 78, past the age at which his own IRA distributions had to begin. She leaves his $480,000 IRA as an inherited account rather than making it her own, takes nothing from it for four years, and hears from no one. By the time anyone tells her, those four quiet years have cost her $47,729 she never had to spend.

Three separate bills make up that figure. The penalty everyone quotes is the biggest, but it is not the one that surprises people. I told her story for HumbleDollar (Inherited IRA Trap); this page is the arithmetic underneath it, laid out so you can follow every number and then run your own.

The household

She is 76 in 2026. She files single, in a state with no income tax, so everything here is federal. She takes the standard deduction and does nothing to optimize: no conversions, no charitable gifts from the IRA.

That last row matters more than it looks. A surviving spouse can take a husband's IRA as her own, which puts her on the owner's schedule. She did not, and nobody asked her to decide.

So she is a beneficiary. A beneficiary's required amount comes from the Single Life table, which divides the balance by a much smaller number than the table an owner uses.

Everyone quotes the ten-year rule, and it answers the wrong question. It says when an inherited account must be empty. It says nothing about whether something is due this year, and for her the answer was yes, every year.

What was due each year

The Single Life table gives the divisor, and the balance divided by it is the amount. For a spouse beneficiary the divisor is looked up fresh each year from her own age.

For comparison, had she retitled the account as her own at 76, the Uniform Lifetime divisor at that age is 23.7 and the first year's amount would have been $20,253. Staying a beneficiary is the larger annual bill, not the gentler one.

The three bills

She discovers the problem in the fifth year and takes all four missed amounts in one return. Three separate costs follow, and they are not the same size.

The penalty is the biggest avoidable bill, but the Medicare surcharge is five times the bracket effect people expect to dominate.

The excise tax

This is a flat charge on money that was going to be taxed anyway. 25% of the $160,631 shortfall is $40,158. If the correction is made and the return filed inside the window the IRS allows, the rate drops to 10%, or $16,063.

The income tax from bunching

This is the one I expected to dominate, and it does not. Taken on time, the four distributions would have added $37,566 of federal income tax across four returns. Taken all at once, they add $38,783. The difference is $1,216. On $60,000 of other income, even $160,631 of extra ordinary income does not climb far enough up the single-filer schedule to matter much.

The Medicare surcharge

Her modified adjusted gross income in an on-time year is roughly $89,000 to $101,000, under the first IRMAA threshold for a single filer, so her Part B and Part D premiums carry no surcharge at all in any of the four years.

The catch-up return puts her MAGI at $215,231. For 2026 that is the fourth surcharge tier, which begins at $205,001. Her Part B premium goes from the standard $202.90 a month to $649.20, and a Part D surcharge of $83.30 is added. That is $529.60 a month, or $6,355 for the year, and it is billed two years after the return it comes from.

Add them up: $47,729 on top of the $37,566 of income tax she was always going to owe.

Two things stand out. The penalty is the biggest of the three, but the surcharge is five times the bracket effect, and it arrives disguised as a premium notice from Social Security long after the tax return is filed. And the correction window matters enormously: filing promptly turns $40,158 into $16,063, a saving of $24,095, which is more than the other two bills put together.

Check your own inherited IRA

The free inherited IRA RMD calculator on this site answers the question she never got to ask: is something due this year, and how much. It asks who you inherited from, whether you inherited directly, whether anyone else shares the account, and for a spouse, whether the IRA has been retitled. Then the three dates: the owner's birth, the owner's death, and your own birth. Then the account type and last year's closing balance.

The owner's two dates settle whether annual amounts are owed at all. The calculator names the rule that governs you, shows the divisor, and lays out the schedule year by year. A trust, an estate, an account inherited from a prior beneficiary, or one never split among several beneficiaries by the deadline gets a card saying why it cannot be computed, and the calculator stops.

The short version

Two facts settle nearly every inherited IRA question: the year the owner died, and whether they had reached their required beginning date by then. If you are married and neither of you has died, work out that age for each of you now and write it down where the survivor will find it. The account will not send a reminder.

See the tax, not just the amount

Model the whole return before you take the distribution

RetireSmartIRA puts an inherited IRA distribution on the same return as your Social Security, pension, and IRMAA tier, so a catch-up year or a planned drawdown shows its full cost before you file.