Missed 2011 RMD

Submitted by mike lightfoot on Thu, 2012-09-20 02:39

My client is 78 years old and he failed to withdraw his 2011 RMD before 12/31/2011. It was withdrawn in January 2012. My question is when calculating his 2012 RMD amount do I adjust his 12/31/2011 account balance by the amount of the missed 2011 RMD?

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Permalink Submitted by Alan Spross on Thu, 2012-09-20 03:51

No adjustment is made to the actual 12/31/2011 balance. Adjustments used to be made before the 2002 IRS RMD rules simplified things by eliminating the adjustment.

Client should file a 5329 with the 2011 return and request the 50% penalty be waived for “reasonable cause”. Client should state the the 2011 RMD was taken ASAP after the omission was discovered. Good chance the IRS will waive the penalty. Either way, both his 2011 RMD and his 2012 RMD will be reported as taxable income in 2012.

Permalink Submitted by mike lightfoot on Tue, 2012-09-25 18:59

Thanks Alan

The client has filed the form and so far no word from the IRS.

Thanks again.