IRA FROZEN DUE TO FRAUD-RMD not possible
My IRA at a brokerage is frozen due to fraud and is currently under a Federal Trustee who will ultimately determine how much money will be returned to me. Since the IRA may still be frozen at the end of 2012, there is no way I could make a required minimum distribution withdrawal. Additionally we will not know what the value of my IRA is until the investigation and resolution is completed. Can someone advise if my assumption is correct?
Permalink Submitted by Alan Spross on Thu, 2012-07-26 18:20
If you have other IRA accounts, you can take the full RMD from the other accounts.
If this is your ONLY IRA account and you cannot take a distribution, you will have to take the distribution when the funds become available and request that the IRS waive the 50% penalty using Form 5329 and the Instructions. The IRS will waive the penalty. However, you would then have 2 RMDs taxable in the following year and it will also incrementally increase your following year RMD since the 2012 RMD amount will still be included in the 12/2012 balance. I don’t know if there is a solution for these other effects other than to file for a letter ruling.