Late RMD situation
Scenario:
75 y.o. Client has IRA money at bank (was there for several years). Money is moved to new advisor on December 29. RMD was not taken in the year of funds being moved. Who is responsible–old custodian (bank) or new advisor? Also, when this is presented to IRS using the appropriate form how should explanation read as to why RMD was missed?
Permalink Submitted by Alan Spross on Fri, 2008-02-15 02:47
Tom is correct. There is no requirement to withhold the RMD when an IRA account is moved by direct transfer, since a taxpayer can aggregate his RMD and take it in any combination from his IRA accounts he chooses. However, you might expect a new advisor to check with the client regarding his RMD status.
The solution now is exactly as spelled out in Pub 590 on p. 57 and on the newly worded Inst. for Form 5329, p 6 under “Waiver of Tax”. The IRS has been amenable so far in accepting any logical reason, but I would get this corrected before the IRS changes direction on this. Of course, this means that the delinquent 2007 RMD and the 2008 RMD will both be taxed in 2008.