RMD-Financial Institution

[zeros]

The taxpayer is generally advised by the financial institution where the IRA is that a distribution is required when the taxpayer reaches 70-1/2. The taxpayer needs to be on guard for this also. How about the tax preparer? Is he duty bound to track all this for the taxpayer and advise him? What do you do?

[dsi]

I know of no legal requirement for us to track this for our clients. Similar to tracking basis in a PS, Corp, or LLC, we are not required to do so. It is the client's responsibility to track these things.

[Bees Knees]

Its one reason why I send out an organizer to all clients, even though most do not fill them out. TTB organizer has a section on the last page that gives reasons why the client should contact the tax preparer during the year.

One reason listed is that the client turned age 70½ during the year.

If a client ever tries to claim that I should have warned him he needed to start taking RMD, I can always turn to that page and say, "I did ask you to remind me when you turned age 70½ right here on this organizer. Thats why I ask you to read and fill the thing out every year for me, so that I can make sure we don't miss anything."

[jim s]

I R A

its the institution responsibility to notify the client that its time to take a distribution when he or she turns 70 1/2

[sea-tax]

From a reality standpoint it is the client's responsibility ultimately. However if you are the investment rep or advisor it would be prudent to remind the client that they need to take out the RMD if you want to keep the client long term. But there is no requirement that I am aware of. However I always do remind my investment clients so I have never looked into whether I had to or not it is just a service that I provide even if I am not required to .

[DaveO]

WF bought out a local bank here

A few years ago. Suddenly several clients who had been getting RMD's for years didn't get them. After contacting the bank I was told they would have to apply for the RMD, that the bank wouldn't just do it. I asked, "So are you telling me that my client is not to expect the same level of service that they received under the predessor bank?" The RMD's were sorted out pretty quickly.

[Roland Slugg]

I've found that a bigger problem is that the letters IRA trustees have been required to mail out for the past three or four years don't make it clear that the owner is NOT required to take a distribution for each of his accounts, if he has more than one ... as most do. I have clients who take their RMD from one account (or a combination of two or more), then ALSO mail back those darn letters authorizing other trustees to send them additional amounts. This often results in clients receiving cash they really don't need, resulting in the needless triggering of income taxes.