no RMDs taken for 82 year old

Submitted by Lori Marrs on Wed, 2023-11-01 23:46

My client just discovered that her mother has never taken any RMDs and she is now 82. Is there a good way to quietly comply? The account is approximately $70k and her only other income is a small pension.



Submitted by Alan - IRA critic on Thu, 2023-11-02 03:53

  • In the past, the taxpayer would have to calculate and take out all the missed RMDs back to the age 70.5 year, and then file a 5329 for each such year requesting that the penalty be waived for reasonable cause. The IRS has been granting the penalty waiver. However, Sec 313 of Secure Act 2.0 provides for a 3 year statute of limitations based on the due date for Form 1040. That said, it is not clear whether this new SOL is retroactive to prior years. If it is retroactive, she is off the hook for all the missed RMDs prior to 2021. For the time being she might take the 2021-2023 RMDs and file a 5329 to request the penalty waiver, then wait to determine how the IRS is applying the effective date for the new statute of limitations. 2020 RMDs were waived.
  • IRA custodians are required to keep taxpayers advised on RMD requirements. Has this taxpayer ignored any such notices from the custodian? 
  • If she makes up the 2021 and 2022 RMDs, the taxable income will be in the year distributed (2023), but the Form 5329 waiver requests are made by filing the 5329 for the respective year.
  • If the IRS clarifies that the new SOL only applies going forward, she will have to make up the pre 2020 year RMDs and file a 5329 for those years as well.

Submitted by Lori Marrs on Fri, 2023-11-03 16:42

This was extremely helpful.  Thank you so much.

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