SIMPLE RMD after 70 1/2
Owner of a small business is contributing to the company’s SIMPLE IRA. Does he need to take RMD after attaining age 70 1/2?
Thanks!
He is now 74 and has not taken RMD from SIMPLE. Course of action would be to take prior and current years RMD? Will he have to pay 50% penalty?
His RMDs can be aggregated, so if he has taken enough out of any other IRA accounts to include the amount of the SIMPLE IRA RMD, he is fine. If he has not, then he needs to make up the missed SIMPLE IRA RMDs back to age 70.5 and file a 5329 for each calendar year requesting a penalty waiver for “reasonable cause”. These forms can be filed without a 1040X. Since the omissions will be self reported, the IRS will probably waive the penalty, but he will be taxed on the total distributions in the year he receives them.
Permalink Submitted by Alan - IRA critic on Tue, 2017-09-26 23:14
Yes. SEP and SIMPLE IRAs require RMDs to start at 70.5 whether retired or not. Contributions can continue without age limits.
Permalink Submitted by Kirk Halveland on Wed, 2017-09-27 15:11
Thank you Alan!He is now 74 and has not taken RMD from SIMPLE. Course of action would be to take prior and current years RMD? Will he have to pay 50% penalty?