What percentage is the penalty for failing to begin a minimum required distribution of a...

For the historical federal tax rule on which this question is based, failure to take a required minimum distribution from a traditional IRA resulted in a 50% excise tax on the amount that should have been distributed but was not. Therefore, D is the intended answer for the question exactly as preserved in the source.

However, this question contains materially outdated federal tax parameters. Current federal law no longer generally begins traditional IRA required minimum distributions at age 70½, and the failure-to-distribute penalty is no longer 50%. Current IRS guidance states that applicable taxpayers generally begin RMDs at age 73 under the present rules, and a missed or insufficient RMD may incur a 25% excise tax, reduced to 10% when the shortfall is corrected within the statutory correction period.

Accordingly, none of the four choices represents the current general federal penalty. D remains the correct legacy exam-key response, but it should not be used as the current federal-tax rule.

Study Guide Reference: Federal Tax Considerations — traditional IRAs; required minimum distributions; historical RMD penalties; current federal distribution rules.