70 1/2 missed 4/1 deadline – reporting year for 5329

Submitted by Jagates on Tue, 2016-09-06 20:06

Taxpayer turned 70 1/2 in 2015. He took his 2015 RMDs from all but one of his IRA accounts during 2015. Another IRA account was identified after 4/1/16 and the RMD from that one account was taken on 4/22/16 (late). The 2015 Form 1040 has not yet been filed. What are the mechanics of filing form 5329 for a missed 4/1 deadline? Because its a 2015 RMD, it would appear that it should be reported on a 2015 form 5329. But, since he had up until 4/1/16 to take this 2015 RMD, it appears that the penalty (if the IRS were to assess one) would be due on his 2016 return.

Would you submit the waiver request on a 2015 or a 2016 Form 5329? Would you then submit that Form 5329 with the 2015 income tax return, with the 2016 income tax return, or as a stand alone form?



Submitted by Alan - IRA critic on Tue, 2016-09-06 23:24

While the missed RMD was for 2015, it did not become delinquent until 4/1/2016. Any excise tax would be due for 2016, not 2015. Therefore, file the 5329 penalty waiver request on a 2016 5329 with the 2016 return.

Submitted by Jagates on Tue, 2016-09-06 23:40

Thank you for such a speedy response.  One follow up question if I may.  Line 52 on the 2016 Form 5329 is described as “Minimum required distribution for 2016”.  Would we include both the portion of 2015 RMD taken in 2016 AND the 2016 RMDs on this line?  Line 53 will be the same amount as line 52 since these amounts were actually distributed in 2016.  I suppose the waiver request attached to Form 5329 will provide the IRS with the explanation on why we are submitting this form even though line 52 minus line 53 is $0 (i.e., had to submit the form because the 4/1 deadline was not met but it was corrected within the same tax year)? 

Submitted by Alan - IRA critic on Tue, 2016-09-06 23:54

The following is copied from a Natalie Choate morningstar article:

> On line 50, enter the amount of the required minimum distributions the client was SUPPOSED to take during that particular year.> On line 51, enter the total of distributions the client actually DID take during the applicable year.> On line 52, enter “zero,” and write “RC” in the margin. Do NOT enter the amount of the shortfall! Even though it APPEARS that you should enter on this line the amount the client failed to take, you are supposed to put ZERO on this line if you are requesting a waiver of the penalty! If you put any dollar amount on this line, the IRS computers will automatically assess the penalty and start sending you dunning notices.> On line 53 (amount of penalty), enter zero.> Attach a statement to the Form 5329 indicating the client’s reasonable cause and also verifying that the client has “remedied the shortfall” (attach a photocopy of the “shortfall check”).

 

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