Announcement

Collapse
No announcement yet.

Late 2019 rmd

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Late 2019 rmd

    T/P realized that they forgot to take RMD for him and wife. They went to institutions in February and took out the required amounts. I have paper work from all institutions showing the withdrawals, but no 1099Rs.
    I will enter on 2019 tax return for the paperwork supplied. Here is my question: While reading about reporting for late distributions, it says that a 5329 needs to be filed with an explanation of the cause for late filing AND the full penalty need to be paid with the return...??? And that if the IRS accepts the explanation they will refund the penalty...???

    Is this how it works????????????
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

    #2
    Why are you entering on 2019 return? Presumably a Cash basis taxpayer - report the distribution as received in 2020.

    5329 is filed with the 2019 requesting the waiver of the 50% penalty for failure to take the distribution in 2019. No penalty is to be sent - you are requesting a waiver.

    Comment


      #3
      According to the 5329 instructions:

      The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows.
      1. Complete lines 52 and 53 as instructed.
      2. Enter "RC" and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54.
      3. Complete line 55 as instructed. You must pay any tax due that is reported on line 55.
      The IRS will review the information you provide and decide whether to grant your request for a waiver. If your request is not granted, the IRS will notify you regarding any additional tax you may owe on the shortfall.

      https://www.irs.gov/instructions/i5329

      Comment


        #4
        NYEA, the issue of when to report the distributions should of been my other question. Are the institutions going to issue 1099Rs for 2020?
        This post is for discussion purposes only and should be verified with other sources before actual use.

        Many times I post additional info on the post, Click on "message board" for updated content.

        Comment


          #5
          Originally posted by BOB W View Post
          NYEA, the issue of when to report the distributions should of been my other question. Are the institutions going to issue 1099Rs for 2020?
          YES

          Under normal situations you would get a 1099 for the late distribution (2019) and the regular distribution (2020) in early 2021 to use on the 2020 tax return. This year with the “no RMD” option your taxpayer may not take the 2020 RMD but you will still get a 1099 for tax year 2020 to reflect any distribution during the calendar year.

          Comment


            #6
            So I should not be reporting these late distributions on 2019 tax return?
            This post is for discussion purposes only and should be verified with other sources before actual use.

            Many times I post additional info on the post, Click on "message board" for updated content.

            Comment


              #7
              There were no "2019 distributions."
              You will receive a 2020 Form 1099-R for the funds withdrawn in February. The income from that event will (only) be reported on the 2020 Form 1040.
              NYEnrolledAgent has explained the procedure you need to follow involving a 2019 Form 5329 and the process for requesting waiver of the 50% penalty.

              Comment


                #8
                Originally posted by BOB W View Post
                So I should not be reporting these late distributions on 2019 tax return?
                only if it was the first distribution taken

                https://www.irs.gov/newsroom/irs-rem...-distributions

                Comment


                  #9
                  Originally posted by Dude View Post

                  only if it was the first distribution taken

                  https://www.irs.gov/newsroom/irs-rem...-distributions
                  Regardless, it STILL would be a 2020 distribution and not a 2019 distribution for income tax reporting.
                  Under the old rules, you could delay the Year #1 payment until the following year, but then you would have to make *TWO* RMDs in the same calendar year. That could be costly tax-wise.

                  Comment


                    #10
                    Originally posted by FEDUKE404 View Post

                    Regardless, it STILL would be a 2020 distribution and not a 2019 distribution for income tax reporting.
                    Under the old rules, you could delay the Year #1 payment until the following year, but then you would have to make *TWO* RMDs in the same calendar year. That could be costly tax-wise.
                    Yes, even though it was considered 2019 distribution if the first distribution and taken by 4/1 it goes on 2020. Hopefully it is this couples first distribution. It is not as expensive as a 50% penalty
                    Last edited by Dude; 05-18-2020, 12:37 PM.

                    Comment


                      #11
                      THANKS to all that participated in this thread ... It was not their first distribution.... and I will tell them to consider not taking another 2020 distribution to eliminate two distributions in the same year.
                      This post is for discussion purposes only and should be verified with other sources before actual use.

                      Many times I post additional info on the post, Click on "message board" for updated content.

                      Comment


                        #12
                        Originally posted by BOB W View Post
                        THANKS to all that participated in this thread ... It was not their first distribution.... and I will tell them to consider not taking another 2020 distribution to eliminate two distributions in the same year.
                        They actually get a "COVID break" on the real 2020 RMD, which is now optional.
                        For the fact checkers, it might be interesting to see if they were required to take **ANY** distributions during calendar year 2020.
                        Depends on how good a tale you relate with the 2019 Form 5329, I guess. . .

                        Comment


                          #13
                          When I completed the 5329 it is showing that the 50% penalty is to be paid with the 2019 return, $2,650. ????? Did I do something wrong? Pay the penalty and wait for the refund?

                          I don't see any area to request abatement except to attach a statement requesting abatement for cause ( client letter explaining circumstances for late withdrawal)
                          Last edited by BOB W; 05-19-2020, 10:49 AM.
                          This post is for discussion purposes only and should be verified with other sources before actual use.

                          Many times I post additional info on the post, Click on "message board" for updated content.

                          Comment


                            #14
                            Bob, Just fill in part IX Form 5329. Example. $2,650 RMD
                            Line 52: $2,650
                            Line 53: 0
                            Line 54: 0 (Enter RC and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54) in this Example: RC $2,650
                            Line 55: will be ZERO

                            attach a statement of explanation.

                            I have done this a few times, client never had to pay any penalty.
                            Last edited by Gene V; 05-19-2020, 11:32 AM.

                            Comment


                              #15
                              Originally posted by Gene V View Post
                              Bob, Just fill in part IX Form 5329. Example. $2,650 RMD
                              Line 52: $2,650
                              Line 53: 0
                              Line 54: 0 (Enter RC and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54) in this Example: RC $2,650
                              Line 55: will be ZERO

                              attach a statement of explanation.

                              I have done this a few times, client never had to pay any penalty.
                              In order to have line 54 zero I have to override the amount that is computer generated from my program with a zero. The amount generated is from my entry that fills the side box of line 54.


                              Never mind I got it without override...……….. Thanks for you help...….Gene.
                              Last edited by BOB W; 05-19-2020, 01:06 PM.
                              This post is for discussion purposes only and should be verified with other sources before actual use.

                              Many times I post additional info on the post, Click on "message board" for updated content.

                              Comment

                              Working...
                              X