Late RMDs and the following year calc
Client’s RMD for 2010 was taken late, in January 2011. Should the year end balance for 2010, used in calculating 2011’s RMD, be what is actually was, or reduced by the late 2010 RMD taken in January 2011?
Client’s RMD for 2010 was taken late, in January 2011. Should the year end balance for 2010, used in calculating 2011’s RMD, be what is actually was, or reduced by the late 2010 RMD taken in January 2011?
Permalink Submitted by Alan Spross on Tue, 2011-09-20 19:14
It used to be adjusted, but starting in 2002 the IRS RMD Regs were changed to use the actual year end balance. As you can see, taking an RMD late also increases the account balance for the next RMD by the amount that would have been taken out had the prior year been done before year end.
Client’s 2011 income will include both RMDs. Also should have filed a 5329 on 2010 return to request IRS to waive the penalty.