You are correct, IRS CODE Sec 401(a)(9) is the RMD rules, for a non spouse beneficiary, the must begin RMDs based on Beneficary by December 31 of the year following IRA owners death, OR entirely disributed by December 31 of the fifth year following death,
Sounds like the started but did not following though, I would say pull the balance be the end of the year, pay the tax