RMD
Is there relief from taking an RMD from an account that is 100% invested in a company that is going through bankruptcy? The company was apparently solvent 31 Dec, 2007 but declared Chapter 11 Reorganization on Feb 10, 2008 and has subsequently gone into liquidation. No RMD has been taken for 2007 and there will likely be no distribution from or access to the investment in 2008.
Permalink Submitted by Alan Spross on Tue, 2008-10-28 20:05
There does not appear to be a reason for missing the 2007 RMD. However, if there is no access to funds for 2008, a request to excuse the excess accumulation penalty on Form 5329 should be filed using the “reasonable cause” procedure per Inst. for 5329, p 6. The IRS has been amenable to waiving the penalty in many cases.
If this is an IRA, since IRA RMDs can be aggregated, if there are other accounts to use for the RMD, the IRS would expect that those other IRAs make up the shortfall amount of the affected account.