My elderly mother was scammed; request for advice

[TreeTired]

Here is another scam to watch out for.  This one is run by the IRS.  As folks get older, they are more likely to get forgetful, right?  Look what happens if you are older than 70 1/2 and you forget to take your RMD from your IRA.  The penalty is far greater than the taxes owed. In fact, the penalty is 50% of the RMD!  If your IRA RMD is $10,000, that means a $5,000 penalty on top of the tax you already owe. This draconian penalty is only out there for people over 70 years old!! 

(I have to add, my personal experience with my Mother in Law was that the IRS will waive the penalty the first time if you send them a convincing letter explaining why it happened and that you won't do it again. At that point you will probably have the IRA trustee set up to automatically make the RMD every year)  But I still say this is a scam that targets elderly. The penalties are revenue and part of the budget. 

[Drole]

If it makes you feel better, my parents fell for the "your daughter is in jail/legal trouble scam" and wired somewhere between $2-4K. 

Seriously.  Without even trying to call me, my husband, etc.

(I've secretly wondered if the scammers pretended this was about my sister, would my parents have fallen for it....I was the mischievous one). 

[Frankies Girl]

Here is another scam to watch out for.  This one is run by the IRS.  As folks get older, they are more likely to get forgetful, right?  Look what happens if you are older than 70 1/2 and you forget to take your RMD from your IRA.  The penalty is far greater than the taxes owed. In fact, the penalty is 50% of the RMD!  If your IRA RMD is $10,000, that means a $5,000 penalty on top of the tax you already owe. This draconian penalty is only out there for people over 70 years old!! 

(I have to add, my personal experience with my Mother in Law was that the IRS will waive the penalty the first time if you send them a convincing letter explaining why it happened and that you won't do it again. At that point you will probably have the IRA trustee set up to automatically make the RMD every year)  But I still say this is a scam that targets elderly. The penalties are revenue and part of the budget.

That's not a scam. The rules are very well explained and there to read and any investment firm you have an account with that requires RMDs should have the information readily available. The penalty is supposed to hurt, because it's very basic - you have to start taking distributions by age 70.5. And most firms also allow and even encourage setting up automatic distribution plans that remove the whole forgetful factor - there's really no good reason to not get this set up beforehand.

Ignorance of the law/rules is not a viable excuse anywhere I've ever heard of. This is like complaining that you didn't see the very clearly marked stop sign because you were distracted and ran it, and then threw a fit, saying that the cops giving you a ticket are scammers.

The fact that the IRS waved the penalty for the first year (and likely would for other years if there was a decent story to why it was missed) is showing that they are trying to be decent about it, but someone that is that forgetful should probably not be in charge of managing their own accounts if they aren't capable of doing basic reading or unable to contact their service rep.

[NeonPegasus]

Here is another scam to watch out for.  This one is run by the IRS.  As folks get older, they are more likely to get forgetful, right?  Look what happens if you are older than 70 1/2 and you forget to take your RMD from your IRA.  The penalty is far greater than the taxes owed. In fact, the penalty is 50% of the RMD!  If your IRA RMD is $10,000, that means a $5,000 penalty on top of the tax you already owe. This draconian penalty is only out there for people over 70 years old!! 

(I have to add, my personal experience with my Mother in Law was that the IRS will waive the penalty the first time if you send them a convincing letter explaining why it happened and that you won't do it again. At that point you will probably have the IRA trustee set up to automatically make the RMD every year)  But I still say this is a scam that targets elderly. The penalties are revenue and part of the budget.

That's not a scam. The rules are very well explained and there to read and any investment firm you have an account with that requires RMDs should have the information readily available. The penalty is supposed to hurt, because it's very basic - you have to start taking distributions by age 70.5. And most firms also allow and even encourage setting up automatic distribution plans that remove the whole forgetful factor - there's really no good reason to not get this set up beforehand.

Ignorance of the law/rules is not a viable excuse anywhere I've ever heard of. This is like complaining that you didn't see the very clearly marked stop sign because you were distracted and ran it, and then threw a fit, saying that the cops giving you a ticket are scammers.

The fact that the IRS waved the penalty for the first year (and likely would for other years if there was a decent story to why it was missed) is showing that they are trying to be decent about it, but someone that is that forgetful should probably not be in charge of managing their own accounts if they aren't capable of doing basic reading or unable to contact their service rep.

True story.

DH inherited an IRA from my mother in law, who passed right after she became old enough to take RMDs. We didn't know that he was supposed to continue taking RMDs and did not do so for 5ish years. As soon as we found out, I took all the RMDs we should have, had tax withheld on all of it and set up automatic deductions and tax withholding. I wrote the IRS a letter, explaining that RMDs were the furthest thing from his mind since he's no where near retirement age and then showed proof of not only fixing what happened in the past but setting it up to be done properly in the future and they waived the penalty (which would have been $1-2k).

[NeonPegasus]

Reading through this thread, I'm starting to wonder if my dad was showing signs of deterioration prior to retirement. For instance, he bought two timeshares (though maybe they weren't so bad). I also seem to recall them mentioning a computer fixing thing like that scam, though I thought it was after they called tech support. I think I need to check on that.