Rmd not taken

[gman]

Taxpayer failed to take RMD and has written a letter asking for a waiver, does form 5329 need to be attached to letter, and if so, should it be for the year missed or the year actually taken?

thank you

[Koss]

Not taken

This may help:

http://preview.tinyurl.com/rmd2207

Oh, wait a minute... Okay, I read the title of your post too quickly. Never mind.

BMK

[FEDUKE404]

Waiver on that RMD not taken that makes all the difference

This topic has been discussed previously on TTB.

As a refresher: You do need to file Form 5329, complete Part VIII which should automatically calculate the "penalty," and then you go through the waiver process.

(Your tax software should handle all of this for you.)

If that fails, you can always refer to Page 7 of the IRS instructions for Form 5329

http://www.irs.gov/pub/irs-pdf/i5329.pdf

And charge your client appropriately!

FWIW: It's my understanding that most valid requests for waivers are upheld...although I would not do so on a regular basis.

FE

[mastertaxguy]

Rmd not taken issue

From the "official" IRS Web Site:

If an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50%. The account owner should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with his or her federal tax return for the year in which the full amount of the RMD was not taken.

Next item:

Yes, the penalty may be waived if the account owner establishes that the shortfall in distributions was due to reasonable error and that reasonable steps are being taken to remedy the shortfall. In order to qualify for this relief, you must file Form 5329 and attach a letter of explanation. See the instructions to Form 5329

If the RMD is not taken during the NEXT year, along with the RMD for that year, the penalty continues.

If computing this, be sure to take into account any basis in the IRA or whatever.

Usually the TP knows or you will know when doing the return for the year in question. If that was missed, it seems logical to amend that year's return, file and request the waiver with form 5329.

As pointed out in early threads, the RMD is calucated with respect to all retirement accounts although the RMD can be taken from one, or more, of the account(s).