Missed RMD's

[Burke]

In light of the previous thread on this and the bank's reporting of the RMD amount to the recipient, I recently received an explanatory booklet from the new bank which is merging with my existing bank regarding their various practices and related changes. This is what it says about RMD notices:

Q. "Will I continue to receive separate required minimum distribution notices for my IRA account?"
A. "No. However, your required minimum distribution for the following year will be on your annual IRA statement."

I am assuming they mean the Form 5498, but it does not specify. I would think all banks will be doing this in the future, and possibly all other custodians as well. Most of my clients include those 5498's in their tax packages when they bring me their documents. In the past I only glanced at them fleetingly, unless the client asked me to figure an RMD for them. So I am now going to be reviewing those forms and making sure my clients understand that, unless they have set up automatic withdrawals of RMD amounts with their custodian, they will need to monitor this and make sure it is done before the end of the year.

[FEDUKE404]

Not necessarily

I'm not sure you can make the correlation with the annual Form 5498 and the reporting of RMD for the account. (Is there some wiggle room - instruction wise - for including the RMD on a Form 5498?) Also, FWIW, it is not uncommon for a client to toss the Form 5498 into "the tax box" and then a 2013 Form 5498 is first seen by a tax pro in the spring of 2014. . . .

Several clients (mostly with an unidentified credit union...) have run into issues where the only mention of RMDs is hidden somewhere on the monthly/quarterly statements, not unlike "YTD interest" or "prior year interest." It could easily be overlooked, especially by some older taxpayers.

Gone are the days when banks send out special notifications (I think even in the distant past via certified mail??) of RMD amounts. They take the position "the account owner has been provided with the required information" and move on.

Adding to the confusion is the scenario where a client has multiple accounts that could be used for reaching the required cumulative RMDs for any calendar year. That raises the issue where it is quite possible for an account holder to take NO distributions from an IRA account and yet still be clear with the IRS since the necessary funds were taken from other accounts.

FE