missed rmd and 50% penalty
I have a client who missed his 2014 RMD. Per standard procedure I requested abatement of the 50% penalty which would entail making the 2014 RMD in 2015 along with the regular 2015 RMD. But that failed to happen. The 2014 RMD was not made in 2015 and will now have to be made in 2016. For purposes of filing the 2015 tax return which is on extension, should I indicate that we are subject to the 50% penalty which is approximately $16,000 or should I attempt to request a second year of abatement?
I figure if I pay now with the filing of the 2015 tax return I will not be hit with any additional penalty. The risk is that the abatement request will be denied and the 50% penalty would be assessed possibly along with additional penalties.
Thank you in advance for your answer
Permalink Submitted by Alan - IRA critic on Tue, 2016-09-06 18:19
No telling how the IRS will react, probably luck of the draw. Suggest client now takes the 2014 and 2016 RMDs in separate checks a couple days apart. File 2015 return as normal showing just the 2015 RMD. Then file a corrected 5329 for 2014 including a copy of the IRA activity statement containing two years of RMDs, explain what happened and request penalty waiver.