Since 5329 will be sent separately how does one prove that they’ve taken the missed RMD?
Since 5329 for 2015 should be sent separately from 2016 return, should one just mention (in the explanatory letter) that the 1099R s for 2016 they’ve included with their 2016 return show that they have taken the missed RMDs, or should they photocopy something that proves they have now taken the RMD?
Also, in IRS instructions it says to file 5329 by itself if you don’t have to file a 2016 return, but if they will be filing a 2016 return (and filed 2015 but 5329 shouldn’t alter it); are you suggesting that they send the 2015 5329 separately because it is from 2015 instead of 2016?
I have read that it is best to complete the 5329 with an explanatory letter and stating that the missed RMD has been taken without paying penalty tax and hoping they excuse it rather than sending in payment with 5329 and hoping for a refund of the penalty tax. Do you agree?
Thank you.
Permalink Submitted by Alan - IRA critic on Sun, 2017-04-02 19:38
If the reasonable cause explanation is thorough, nothing additional needs to be sent. But it does no harm to send a copy of the distribution statement showing the amount of the late RMD distribution. The 2016 return should include a 2016 5329 if one is filed, but not a 5329 from any prior year. If a 2015 5329 was filed with the 2016 return, the IRS would probably think it was a 2016 5329 or the wrong edition date was used. Therefore, forms for different tax years should not be combined when a 1040 is filed. It is OK to send in 5329 forms together for multiple years however. Payment of the 50% penalty should not be included unless it is being paid with no waiver request. Remember to read the 5329 Inst carefully regarding what goes on each of the 4 lines because it is no intuitive.