Statute of limitations on missed RMDS/excess contributions, pre-SECURE 2.0

Submitted by Robert Vashko on Fri, 2023-01-06 02:18

I recognize the issue that SECURE 2.0 was trying to solve with the indefinite prescriptive period (oxymoron?) on missed RMDs and excess contributions when no 5329 was filed.

But, technically speaking, *were* there, respectively, 3- and 6-year statute of limitations on those errors prior to SECURE 2.0’s enactment?

I am (pretty?) sure the 3-year SoL on missed RMDs existed prior to 2023, and I *think* the 6-year SoL on excess contributions existed prior to 2023 as an “understatement of income” error.

Am I right on both counts, or did these truly come into existence on December 29th?

Please and thank you.



Submitted by Alan - IRA critic on Fri, 2023-01-06 02:41

  • Those prior SOLs existed, but only upon filing a 5329. While almost all 5329 forms were filed pursuant to correcting excess contributions and accumulations, there were a few that filed them with 0 entrys as a  precautionary measure just to generate a SOL.
  • There has been some question about Sec 313 of Secure 2.0 effective dates, whether it only applies to returns filed after enactment, or to tax years starting after enactment (2023), or some have even asked about retroactivity. I don’t expect that it will apply to any tax years prior to 2022, for example for a 2021 1040.


Submitted by Jonathan Williamson on Fri, 2023-01-06 04:38

  • While I had similar questions initially, after reading the statutes more, I respectfully disagree with Alan above.
  • The statutory changes in section 313 clearly state that after the act is effective, the IRS must assess within three years or six years after the form 1040 was filed. My sense is that as there is no retroactivity clause, prior assessments would stand, while new assessments cannot be made if past three/six years after filing form 1040.
  • In regard to filing form 5329, the excise tax on RMD is a one-time tax, while the excise tax on excess contributions is every year till the excess contributions and related earnings are removed. So I imagine that the statutes of limitations only really close for the years where three years have passed after filing form 5329, meaning the IRS can hypothetically still assess even after thirty years for the past three years and all years going forward, if people were to consistently file form 5329. Moreover, I think there is some case to be made that someone filling in zeros in form 5329 is doing it willfully and hence no SOL apply.

 



Submitted by ZPeter on Thu, 2023-10-05 19:36

  • Jumping in on an old question. What are your thoughts now – if an overcontribution was possibly made in 2020, and a 1040 was filed, would the statute of limitations of end in 2027 (6 years after taxes were filed) – meaning that, after 2027, no 6% excess tax can be imposed on that overcontribution? 
  • I was reading over the last bullet, and I’m not sure what is meant, using the example of thirty years later tax being imposed – how would that work if there was a statute of limitations?


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