Not enought rmd taken for 2017

[ruthc]

Client took out $800 less than he was required for his 2017 IRA distribution. He just went to the bank (2018) and took it out and told the bank to apply to 2017. Of course they said "no". If I am correct, I need to prepare a form 5329 and he will have to pay a penalty (50%)for this error. Is there any way to receive a waiver of this penalty, and if so how to do? Also, how should this $800 distribution in 2018 that will trigger a 1099 be handled? I am thinking that it is just going to be an additional distribution in 2018 that he will have to pay taxes on as a normal distribution. So his total distribution for 2018 should be this distribution plus his normal RMD for 2018. I just want to make sure I am not missing anything. Thanks for any info.

[ruthc]

If he does not need the money

If he didn't need the money, can he just use that distribution for his 2018 RMD instead? He would pay the penalty and just forget the $800 distribution for 2017 by not taking any extra in 2018 for it. Of course, I imagine this would affect any waiver requested.

[JON]

All I remember is at a seminar the presenter said never pay a penalty for RMDs being wrong or missed. Give theM AN explanation on the 5329 and wait and see if you hear anything back. He said he had never been charged a penalty.

I had a different one two years. Client went out to lunch with an old friend who started talking about the retirement money he was getting from an employer they both worked for years ago. My client got the administrator information from him and contacted them and his financial guy. As it turns out the plan did not have a current address for him. He was 76 pulled the RMDs he had missed we attached the explanation and SO FAR HAVE HEARD NOTHING.

[Lion]

His 2017 RMD will be $800 under. Make sure you explain he already remedied his error.

His 2018 RMD will be $800 over, but there is no penalty for over.

[ruthc]

Thanks

I have read many of the posts on this subject, but they didn't address all my concerns. I just went into last year's return to do a sample of this situation on form 5329. Now I understand how the penalty and waiver works on the form. Thanks to everyone!

[ruthc]

Thanks FE

Thanks for your additional input. Although I did the sample on 2016, I would think the 2017 is the same, but I will make sure before filing. Thanks again! Sometimes I just need confirmation on my thinking even though I do the research ahed of time.

[taxea]

Call the IRS for a waiver. They are very cooperative with this issue.