Probably asked and answered many times but can someone point me to a write up of what the correction process is when you encounter a person who hasn’t taken RMDS for the last 5 years (of course none was required in 2009)?
Thanks
So there’s no Voluntary Compliance Resolution process like there is with qualified plans?
Thanks
It is not referred to as that, but functions in similar fashion as Mary Kay indicated. This is outlined on p 6 of the 5329 Inst, and the IRS has been very flexible in accepting what is an “RC” (reasonable cause) for missing the RMDs, and waiving the 50% excess accumulation penalty.
The IRS is tightening up notification requirements for RMDs, so this general leniency granted in most cases could be on borrowed time.
Permalink Submitted by mk foss on Fri, 2010-05-21 16:30
There are two issues here: income taxes and penalty taxes.
There is a 50% penalty on missed RMDs. The IRS can waive the penalty only if the missed amounts are withdrawn. You would figure the RMDS based on the year end balances for all of the applicable years. To deal with the penalties, you file a separate Form 5329 for each year and either pay the penalty or request a waiver of penalty. The RMDs themselves are taxed on the 1040 for the year they are withdrawn.