Which Year’s Form 5329?
Taxpayer turned 70.5 in 2008. The taxpayer was employed through August 2010, and contributing to the 401k plan. They failed to take the RMD from their IRA for 2008 and 2010.
Do they complete a form 5329 part VIII for 2008 and another for 2010?
If you are wondering, they have not filed their 2010 tax return, and have not requested an extension to file.
The taxpayer was advised to take the necessary action to remove the RMDs from their IRA.
They are planning to write a note requesting a waiver of the penalty.
Permalink Submitted by Alan Spross on Wed, 2011-04-20 18:37
Taxpayer should use a 2009 5329 for the 2008 RMD because that RMD was not delinquent until 4/1/09. This can be done on a stand alone basis requesting the waiver for reasonable cause per the 5329 Inst. p 6.
The 2010 RMD 5329 should go on a 2010 5329 with the 2010 return. Presumably, the special 2009 waiver can be used as his excuse for confusion. Of course, the late filing penalty and interest is another problem not so easily solved.
For 2011, taxable income will include the 2008 RMD, the 2010 RMD, the 2011 RMD all from the IRA, as well as the 2010 and 2011 RMDs for the 401k. That’s 5 years of RMD income all taxable in 2011. The 401k RMD for 2010 also became delinquent as of 4/1/2011, so there will be another 5329 waiver request with the 2011 return.
Permalink Submitted by Clyde Wolf on Wed, 2011-04-20 18:49
Alan,
Thanks for the reply.
I appreciate the last paragraph summarizing the various distributions….
Permalink Submitted by Clyde Wolf on Thu, 2011-04-21 19:51
To help ease any tax burden caused by receiving the many RMDs in 2011,
I suggested to this taxpayer they make the 2011 RMDs Qualified Charitable Distributons.
Doing QCDs in 2011 will keep the 2011 RMD from being taxed on their 2011 1040.