RMD not taken in 2011 – Waiver of Penalty
A new client discovered they missed their RMD for 2011 when getting their taxes done. The RMDs for 2011 were taken immediately (in 2012). I understand the client can request a waiver of the penalty. But how does the income get reported? I’m guessing the client will need to report the income on the 2011 return (even though the distribution occured in 2012). Will the IRA custodian then include the distribution amount on the 2012 form 1099?
Permalink Submitted by Alan Spross on Mon, 2012-03-19 15:55
The income is reported in the year of the distribution, therefore the taxpayer reports according to the 1099R as issued. Client will then have no RMD taxable in 2011 and two RMDs in 2012.
The penalty waiver can be requested on Form 5329 according to the Inst, p 6. That form goes with the 2011 return or by itself if the 2011 return as already been filed.
Permalink Submitted by mk foss on Mon, 2012-03-19 16:32
It is important than the penalty waiver request state that the missed distribution has already been withdrawn. IRS needs that in order to waive the penalty. You should also give a reason for missing the distribution, which need not be elaborate.