The 25% Tax Penalty on Inherited IRAs That Drops to 10% Only if You Fix It Fast Enough

Inherited IRA beneficiaries may learn of an IRS excise-tax penalty only after receiving an IRS notice, by which point one of the two available penalty-reduction options has expired. The issue highlights a potentially costly compliance risk for beneficiaries subject to inherited-IRA distribution rules, though it is unlikely to have broad market impact.