IRA 2008 RMD no funds to distribute

[blliss]

.
IRA funds became "0" in 2008. Client not able to take RMD. Any ideas
what to do?

[S T]

Year

Which year for RMD 2008 or 2009?

If 2008, RMD calculated on 12/31/07 balance, and in that case I don't know the answer if there are no funds.

If 2009, RMD calculated on 12/31/08 balance - which would be -0-. However, RMD has been suspended for year 2009.

Sandy

[blliss]

IRA 2008 RMD no funds to distribute Reply to Thread

2008, RMD calculated on 12/31/07 balance

[erchess]

If

the RMD is significant, in my opinion the client needs a Tax Attorney. There is in the tax code an overriding provision to the effect that if a requirement of the code is patiently unjust then it can be set aside in a specific case. I think this case cries out for that provision to be applied but the client seems likely to need a tax attorney to make the case.

If the RMD is relatively small it may literally be cheaper for the taxpayer to tax him or her self as if the RMD had been distributed.

Presumably the balance on 12/3`/08 is zero and besides RMDs for 09 are suspended so the relevant question is whether to dissolve the account in 09 (and if so, how?) or hope that some of the securities held will recover their value.

[outwest]

I don't get it..

"IRA funds became "0" in 2008. Client not able to take RMD. Any ideas"

Assuming a 12/31/07 balance, how did the funds become zero? Single worthless investment? Transferred somewhere? Spent?

Second, don't forget that you can take the RMD for each account or just one as long as the total RMD for the year is met. Does he have other IRAs from which the fund could be pulled?

I'm still bugged by what happened to the money?

[blliss]

IRA 2008 RMD no funds to distribute Reply to Thread

the RMD is significant, in my opinion the client needs a Tax Attorney. There is in the tax code an overriding provision to the effect that if a requirement of the code is patiently unjust then it can be set aside in a specific case. I think this case cries out for that provision to be applied but the client seems likely to need a tax attorney to make the case.

If the RMD is relatively small it may literally be cheaper for the taxpayer to tax him or her self as if the RMD had been distributed.

Presumably the balance on 12/3`/08 is zero and besides RMDs for 09 are suspended so the relevant question is whether to dissolve the account in 09 (and if so, how?) or hope that some of the securities held will recover their value.

Thank you, erchess. This seems like a very sensible way to go.
I shall pass it on to my client.

[JohnH]

I'm puzzled by this as well. The RMD is based on the account balance at year-end, so if the account balance is zero, then the RMD is zero. What am I missing?

[Gretel]

I am puzzled as well, how can you make a distribution from a zero value? I hope we get more details.

[thomtax]

If I am reading the original post correctly, there was a balance at the end of 2007. With the falling stock market, sometime before the RMD was taken in 2008, the balance dropped to 0, leaving nothing to distribute. It could be something like the Lehman deal, where its collapse suddenly wiped out the shareholders.

Of course, my usual disclaimer "I reserve the right to be wrong."

LT

[Nashville]

Unnecessarily Complicated?

I hope I'm not revealing my stupidity.

I think the key word in RMD is "Required." If the "required" amount is based upon a percentage of funds in an IRA, and there aren't any funds, then how can there be any requirement? As the brilliant philosopher said, "Nothing comes from nothing."

There may have been a balance at the end of 2007. But the reversion to zero should still provide no requirement. To me, this is more a custodian problem than a taxpayer problem.
IRS directs that the custodian pay the RMD as well.

If a requirement somehow still exists because of a 12/31/07 balance, I'll refer to a previous post and draw upon another IRA account (if one exists) to make up the difference.

[BOB W]

Come on guys> If there is no money> there's no money......It is over.

Don't forget to take a schedule A Misc deduction, if qualified.

[Gretel]

I hope I'm not revealing my stupidity.

Hi Nash, couldn't help myself to quote a saying (no opinion taken on your actual post):

It's better to be quiet and appear stupid then to open your mouth and have all doubts removed.

The later one has happened to me numerous times.

[blliss]

IRA 2008 RMD no funds to distribute

If I am reading the original post correctly, there was a balance at the end of 2007. With the falling stock market, sometime before the RMD was taken in 2008, the balance dropped to 0, leaving nothing to distribute. It could be something like the Lehman deal, where its collapse suddenly wiped out the shareholders.

Of course, my usual disclaimer "I reserve the right to be wrong."

LT

thomtax, you are correct on all accounts.... something like the Lehman deal before the RMD was taken in 2008.... and besides, taxpayer has no other IRA funds. (So, no disclaimer from you necessary!)

[David1980]

Accidentally stumbled into this thread and thought it could be useful here.

http://benefitslink.com/boards/index.php?showtopic=40570

[erchess]

Key Information

So apparently the regs do cover this situation very humanely and reasonably by providing that the RMD is never more than is in the account when it is taken.