Computing current year RMD after missing prior year
My client has an inherited IRA and failed to take the remaining RMD not taken by her deceased father. Is the amount missed for 2013 included in the balance for determining 2014 RMD? She has also been told by an investment adviser that by taking the missed 2013 RMD in 2014 the distribution will partially or fully satisfy her 2014 RMD. Can that be right?
The intent is to pay the missed RMD as soon as possible and file for a waiver of penalty. I have yet to read anything pro or con about whether a payment of a missed RMD can have a double benefit in the year paid. Any thoughts?
Andy
Permalink Submitted by mk foss on Mon, 2014-01-06 22:18
Your client should take the remaining RMD for her deceased father ASAP. You use form 5329 to apply for the penalty waiver.Her first RMD will be for 2014. She does not reduce the 12/31/13 IRA balance by the late RMD for her father and none of his RMD qualifies as hers. The RMDs for the daughter will be smaller than what her father was taking so this little glitch shouldn’t cause a big tax problem.