BTW, can someone explain to me the rational behind the penalty that if one has a traditional IRA and fails to begin taking enough money out of it at age 70.5, one is then taxed at 50%(!!!). I can see some of the rational to make the investor take money out, but 50% for the many people who have small accounts is truly draconian...
(I have a relative with dementia in this position — I can’t figure out why the withdrawals were not done — B4 the dementia began, I think — but if the 50% penalty is enforced, that just puts him into subsidized care that much sooner.)
I believe the penalty is 50% of the amount you needed to take out that particular year, i.e. not the whole balance.
The rationale behind it is a combination of denying passing of assets to descendants and “get the money in the economy”. The former is a big libtardian progressive goal, your “assets” should go back into the “pool” when you die and inherited wealth is “evil”.
Remember that the 401k/IRA money was not taxed when it was put in. So to me it’s reasonable to require that it be taxed at some point.
We can argue over what the rates of “fair” taxation should be, but making it subject to some tax is only proper in my view.