Missed RMD Inquiry

Submitted by Kevin O'Hearn on Wed, 2023-03-01 20:29

Hello,

I have two questions related to missed RMDs

1. With respect to the lowering of the missed RMD penalty from 50% to 25% in SECURE Act 2.0…..does this apply to RMDs missed in 2023 and moving forward only? Or would RMDs missed in 2022 qualify for the reduced penalty? The reason I ask is the effective date of the change is listed as 12/29/2022, so wasn’t sure if that would allow all missed 2022 RMDs to benefit from the new reduced penalty.

2. In the event that someone asks the IRS for a waiver of the missed RMD penalty via form 5329…..if the IRS rejects their waiver, but doesn’t notify them of the rejection for 1-2 years, does client have to pay interest on the penalty amount that they owe, even though it took the IRS multiple years to confirm the rejection?

Any guidance would be greatly appreciated. Thank you.



Submitted by Alan - IRA critic on Wed, 2023-03-01 21:14

  1. Reduced penalties apply to corrected RMD failures for years 2023 and beyond. However, the reduced penalties may make it less likely that the IRS will waive the penalty like they have been routinely doing in recent years following a properly filed 5329 stating the “reasonable cause” for missed RMDs. 
  2. The IRS has not been rejecting waiver requests if the late RMD has been made up and a proper 5329 filed, but there could be exceptions you are aware of. With little precedent, it’s not clear that any interest would be charged and what time period it would encompass.


Add new comment

Log in or register to post comments