Missed RMD from IRA in 2022 and 2023
Client missed taking RMD from his IRA in 2022 and 2023 – last took one in 2021.
Following steps to be taken correct?
– Satisfy in 2024 both of the missed RMDs
– File Form 5329 (2022) standalone for tax year 2022 acknowledging failure , calculating 50% excise tax and requesting waiver of penalty if appropriate
– File Form 5329 (2023) along with 2023 Form 1040 acknowledging failure , calculating 10% excise tax and requesting waiver of penalty if appropriate
Should client pay the excise tax and hope for refund if IRS approves request for waiver ?
Since the correcting distributions were made in 2024 the tax on those distributions will be paid with the filing of the 2024 tax return – Client does not need to file 1040-X amended returns for 2022 and pay tax on distribution should have been made in previous years?
Thanks
Howard
Permalink Submitted by Alan - IRA critic on Fri, 2024-01-05 22:43
The 5329 forms are not intuitive, so client should carefully review the 5329 Inst for what goes on each line. There should be no payment of the excise taxes up front. The IRS will bill the penalty if for some reason they do not grant the waiver. The 2022 5329 should technically be filed with a 1040X, and the 1040X provides a box in which to make the “reasonable cause” explanation. It’s correct that the taxes on these made up RMDs as well as on the 2024 RMD will be taxable on the 2024 return.
Permalink Submitted by Howard Hook on Fri, 2024-01-05 22:47
Thanks Alan.Ok to file 5329 for missed 2023 RMD on the 2023 Form 1040?The 2022 1040X will not show any additional tax due or will it show just the excise tax for 2022 as amount due?Howard
Permalink Submitted by Alan - IRA critic on Fri, 2024-01-05 23:08
Yes, the 2023 5329 can be filed with the 2023 1040. The 2022 1040 X with the 5329 will not show any tax due, but the 5329 must be completed correctly per the Inst.