Late 2019 rmd

[BOB W]

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????????????

[New York Enrolled Agent]

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.

[Dude]

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

[BOB W]

NYEA, the issue of when to report the distributions should of been my other question. Are the institutions going to issue 1099Rs for 2020?

[New York Enrolled Agent]

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.

[BOB W]

So I should not be reporting these late distributions on 2019 tax return?

[Dude]

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

[Dude]

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

[BOB W]

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.

[BOB W]

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)

[Gene V]

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.

[BOB W]

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.