Missed 2010 RMD

Submitted by Robert Wright on Tue, 2011-03-01 18:20

I didn’t take my 2010 RMD.

Which of the following do I use to calculate my 2011 RMD?

1) 2011 RMD = (12-31-2010 IRA Value) / Life Expectancy

This option uses the 12-31-2010 IRA value which has the 2010 RMD still in the account.

2) 2011 RMD = (12-31-2010 IRA Value – 2010 RMD) / Life Expectancy

This option adjusts the 12-31-2010 IRA Value by subtracting the amount of the 2010 RMD that should have been withdrawn from the IRA in 2010.

Thanks for your help.



Submitted by Alan Spross on Tue, 2011-03-01 18:29

Option 1.

Adjustments used to be made prior to 2002, but the 2002 IRS RMD rules made this change to simplify the calculation. Obviously, it results in the 2011 RMD being higher by the % of the account that you would have withdrawn in 2010.

You should take the 2010 RMD out as well and request a waiver of the penalty on Form 5329 attached to your 2010 return. Both distributions will be taxable in 2011.



Submitted by Robert Wright on Tue, 2011-03-01 18:40

Alan,
Thank you very much.
Bob



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