RMD on spousal beneficiary
DOD for IRA owner is 10/20/15 and spouse is beneficiary. IRA is an annuity which goes into the spouse’s name immediately. RMD for 2015 had not been sent, usually goes out in December. Annuity Company did not mail the RMD to the spouse until 3/8/16 and will not send a 1099 until 2017. What would be the rule on this. Surely the spouse will not be penalized? .
Permalink Submitted by Alan - IRA critic on Fri, 2016-03-11 20:06
Spouse needs to file a 5329 for 2015 requesting waiver of the penalty for reasonable cause. She should remove the 2015 RMD amount now so she can state that she has made up the shortfall in her reasonable cause explanation. The IRS will waive the penalty under these circumstances.
Permalink Submitted by Richard Dickens on Mon, 2016-03-14 19:50
Thanks, but I did not understand the “remove the 2015 RMD amountNow……”. Thanks again.
Permalink Submitted by Alan - IRA critic on Mon, 2016-03-14 22:28
In order to waive the penalty for not having taken the RMD in the previous year, the RMD must be withdrawn so the IRS can be told that the oversight has been corrected. In other words, the IRS is not going to waive the penalty if that late RMD is still outstanding.
Permalink Submitted by Ralph Miller on Fri, 2016-03-11 22:29
If Spouse is not 70 1/2 she doesnt have to take any RMD, right?
Permalink Submitted by Alan - IRA critic on Fri, 2016-03-11 23:29
Owner was taking RMDs, so the 2015 RMD is required. If surviving spouse rolls over the inherited IRA in 2016 and will be under 70.5 there are no RMDs for 2016 and beyond until survivor reaches 70.5.
Permalink Submitted by Richard Dickens on Mon, 2016-03-14 22:36
In other words, received from the custodian this year so the taxes will be paid on it for 2016.
Permalink Submitted by Alan - IRA critic on Mon, 2016-03-14 23:16
Yes. There is no way to have the RMD taxed for last year. It must be reported as taxable income in the year actually distributed.