First RMD on Traditional Beneficiary IRA – Deadline Miss!
Friend’s father passed away November 2013. Traditional Beneficiary IRA account opened and funds from father’s IRA transferred 12/23/2013. No RMD taken for 2014. Beneficiary desires to stretch distributions over her Single Life Expectancy. Is it too late now to take a 2014 RMD? Does not taking the RMD yet jeopardize the distributions-over-single-life-expectancy plan and somehow now require distribution over 5 years? That is not what she wants and not taking RMD by 12/31/14 a simple oversight. What is best course of action at this point? Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2015-02-12 21:34
Distribute 2014 RMD now separate from 2015 RMD. File Form 5329 with 2014 tax return requesting a waiver of the penalty for reasonable cause and state that the missing RMD was taken as soon as the omission was discovered. IRS may not reply which is good news as they approve most of these self reported and corrected RMD delinquencies. Stretch will not be jeopardized. But was father’s 2013 RMD completed? She is also responsible for completing the year of death RMD if it was an RMD year for father.
Permalink Submitted by Adam Holiber on Thu, 2015-02-12 22:07
Thanks. Yes, father’s 2013 RMD was completed. Thanks for answer. I guess she is considering just not bothering with the 2014 RMD and the 5329. The amount is only about $8K. But I assume you would advise to croos all T’s and dot all I’s…..
Permalink Submitted by Adam Holiber on Thu, 2015-02-12 22:10
If 2014 RMD is received in 2015, wouldn’t 1099 be generated for 2015 on that amount and so 5329 would have to be filed with 2015 taxes? I’m confused…..
Permalink Submitted by Alan - IRA critic on Thu, 2015-02-12 23:52
5329 should be filed for the year the penalty would be assessed for – 2014. The 1099R will always be for the year the distribution is taken. It will be taxable in 2015, but there is no penalty for 2015, it is for 2014. If 2014 already filed, the 5329 should be filed with a 1040 X.
Permalink Submitted by Adam Holiber on Fri, 2015-02-13 04:29
Thanks!!