Failure to withdraw MRD’s over 7 year period
3 Questions:
consulting a potential client and it looks like she has not taken the MRD for a 7 year period.
I understand I can file form 5329 for each year, and then request an abatement of the 50% penalty. is that correct?
Am I required to file an amended return for each year to property pay the income tax each specific year?
Also, when requesting the money from brokerage house where IRA is, do I need to have a separate check(7) for each year? how does IRS reconcile this since I assume I will get a 1099R for 1 lump sum in year 2014 when in fact will be applying that over 7 year period?
I apologize if this was answered on this site previously. I am currently looking thru the archives now. Any help would be greatly appreciate. thank you
Permalink Submitted by David Castelli on Mon, 2014-12-29 20:31
my bad on questions 2 & 3……no prior income tax since no money actually withdrawn
Permalink Submitted by Alan - IRA critic on Mon, 2014-12-29 21:41
Yes, a 5329 must be filed for each year requesting waiver of the penalty for reasonable cause. The IRS may ask for a 1040X with each 5329, but client could try submitting just the 5329 forms for each year with a cover letter. This waiver request does not require any other changes to those filed returns. The makeup RMDs will all be taxable in the year distributed. Just one check for the accumulated delinquent total can be requested, and the current year RMD should be requested separately since there is no 5329 for the current year. The breakdown for each year’s delinquent amount will show on each respective 5329. Remember that 2009 RMDs were waived.
Permalink Submitted by David Castelli on Tue, 2014-12-30 13:27
Alan, your the best. Your expertise and insight greatly appreciated. Thank you, and a Happy & Healthy New Year to all