MRD too small in 2006

[KJ Judd]

In computing the minimum required distributions from IRA for 2006, one IRA was omitted in determining the combined fair market value at 12/31/05. We just discovered the omission now. A MRD of $6000 was made. The correct MRD amount including all accounts should have been $6800.

Do we need to take an additional $800 out in 2007 to compensate? I know we have a potential penalty on this, but not sure if we want to proactively address this or wait until we get a notice. Thought?

[sea-tax]

In computing the minimum required distributions from IRA for 2006, one IRA was omitted in determining the combined fair market value at 12/31/05. We just discovered the omission now. A MRD of $6000 was made. The correct MRD amount including all accounts should have been $6800.

Do we need to take an additional $800 out in 2007 to compensate? I know we have a potential penalty on this, but not sure if we want to proactively address this or wait until we get a notice. Thought?

KJ have client take out the 2006 RMD additional amount now, as well as make sure that the 2007 is satisfied. Then when amend 2006 year tax return. Attach a form 5329 penalty to the $800 missed Rmd which should be $400. If the client has reasonable cause for missing the RMD attach a letter to the 5329 asking for abatement of the penalty and do not enclose the $400. SEE TTB page 13-25 for 2006