Late RMD

[erchess]

My Mom and Dad have traditional IRAs to which all contributions were deductible and they long ago reached the age to begin taking and dd begi8n taking their RMDs. For 2012 however Dad never got around to taking care of that until on about 1/5/13 he and Mom wrote checks against the IRA Accounts and deposited them in their joint checking account at another institution. (The custodian of the IRAs is a discount broker and in past years RMDs have gone into their JTWROS brokerage account.) Now for my questions- I assume that their 2012 returns will not include Forms 1099R from the IRAs since they did not take distributions in that year. That has to be correct, right? Now, on their return for what year does the failure to take an RMD get reported and what is the procedure in regard to the penalty? If I remember right you do this on the 2012 return and do not calculate or include a penalty. Then in the fullness of time the IRS writes and asks for the penalty and you write back with either a check or a request for abatement and in the latter case this dance goes on for goodness knows how many rounds til it is resolved.

[RLymanC]

My Mom and Dad have traditional IRAs to which all contributions were deductible and they long ago reached the age to begin taking and dd begi8n taking their RMDs. For 2012 however Dad never got around to taking care of that until on about 1/5/13 he and Mom wrote checks against the IRA Accounts and deposited them in their joint checking account at another institution. (The custodian of the IRAs is a discount broker and in past years RMDs have gone into their JTWROS brokerage account.) Now for my questions- I assume that their 2012 returns will not include Forms 1099R from the IRAs since they did not take distributions in that year. That has to be correct, right? Now, on their return for what year does the failure to take an RMD get reported and what is the procedure in regard to the penalty? If I remember right you do this on the 2012 return and do not calculate or include a penalty. Then in the fullness of time the IRS writes and asks for the penalty and you write back with either a check or a request for abatement and in the latter case this dance goes on for goodness knows how many rounds til it is resolved.

Found this WEB site,,,may help, hope so.

http://www.retirementdictionary.com/articles/missedrmddeadline

[FEDUKE404]

Dealing with RMD non-payment

My Mom and Dad have traditional IRAs to which all contributions were deductible and they long ago reached the age to begin taking and dd begi8n taking their RMDs. For 2012 however Dad never got around to taking care of that until on about 1/5/13 he and Mom wrote checks against the IRA Accounts and deposited them in their joint checking account at another institution. (The custodian of the IRAs is a discount broker and in past years RMDs have gone into their JTWROS brokerage account.) Now for my questions- I assume that their 2012 returns will not include Forms 1099R from the IRAs since they did not take distributions in that year. That has to be correct, right? Now, on their return for what year does the failure to take an RMD get reported and what is the procedure in regard to the penalty? If I remember right you do this on the 2012 return and do not calculate or include a penalty. Then in the fullness of time the IRS writes and asks for the penalty and you write back with either a check or a request for abatement and in the latter case this dance goes on for goodness knows how many rounds til it is resolved.

You're reasonably close.

I had a client a couple of years ago who also did not take the full "prior year" RMDs until January of the "new" year. (The fact there were around six different IRAs did not help, as well as Form 8606 was also involved from past "oops" by putting non-deductible funds into the traditional IRA.)

Once you get the numbers (I will assume you've cleared all the issues with "the rules") you go to Form 5329, Part VIII. You fill in required 2012 RMD total, actual RMD taken during 2012, and the difference is theoretically subject to the 50% penalty. You enter (depending on your software) how much of the "non-distribution" should be waived. If all is to be excluded, you should eventually see a zero on both lines 52 and 53 along with the notation ("RC $xxxx.00") to the left of line 52.

You do have to provide IRS with facts to support the waiver. I used (via text area with efiled return) something along the lines of error on TPs part, resolved once realized early in new year, etc. From everything I could find, it appears the IRS will grant the waiver for a first-time offender, but doing so IS at their discretion. FWIW: My client never received any return correspondence from the IRS (good or bad) so we just assume it went through OK.

Hope this helps. Again, your software should take you through things OK. And, don't forget, even though the 2012 RMD was taken late in 2013, they STILL must deal with the "real" 2013 RMD prior to 12/31/2013. (You may wish to see if the dollar amount of the RMD for 2013 needs to be recalculated by the custodian?)

FE