2013 RMD on 403B TSA

[S T]

Just received a copy of a letter written to an Attorney on the T/p spouse's behalf. Spouse had a 403B TSA in place - spouse over age 70.5 and a MDR form had been executed in Nov 2006 and is on file. Through 2012 the Account Admin had honored the request - and spouse has received her MDR each and every year.

For Year 2013 - the Account Admin took it upon themselves, to not honor a "standing" MDR form for 2013, and opted not to issue the check for the MDR, something about new forms and Power of Attorneys.

Unfortunately, this is significant, as the spouse has now progressed into an Alzheimer's state, so is not able to execute documents. The husband does have valid POA's on file, but the Account Admin is not honoring.

Okay - Legal issues are being resolved, I will let the Husband and the Attorney's handle with the Account Admin on the 403B account

My question is - For 2013 - the 403B RMD was NOT made - how to treat on the 2013 Tax Return. I certainly do not want to impose the none RMD penalty- as this was the Account Admin that did not honor the RMD - and at the attorney
now to resolve, which could take months ----

Do I not file the 5329 and acknowledge ?? or file the 5329 and acknowledge with a request for waiver and hope that all settles out.

I see a large issue for the T/p and spouse, as it appears to be a "legal" trust issue with the spouse becoming incapacitated.

Thoughts

Sandy

[taxxcpa]

I've had this happen twice. Use line 52, Form 5329 to request a waiver. Then I attached a schedule explaining that the client was elderly and had relied on the custodian to follow instructions to disburse the RMD. I also stated that the client would take the overlooked RMD in January.
Double check page 2 of the Form 1040 to make sure your tax program does not still show the penalty. I had done something wrong on Form 5329 at first, and had to correct it to eliminate the penalty on page 2 of the 1040.

My tax program, Drake, has a link (SCH) that I clicked to access the schedule to enter the explanation for the waiver request.

The IRS raised no questions and made no request for payment of the penalty.

I advised the clients to take the RMD in Nov instead of Dec so they would have time to contact the custodian before it was too late if the custodian failed to disburse it. In my own case, I calculate the RMD and take it in January. I always take more than the RMD in case I miscalculated the ending balance. I see no need to wait until December.

Since the RMD percent increases every year, I prefer to take extra amounts to prevent having to take out a very high percent as I get older. Instead of spending my RMD, I reinvest it in a taxable account and in the past have used it to pay off mortgages early.