Client failed to take RMDs from IRA-BDA
RMD was set up to distribute monthly. This worked as planned in the first year but then technology failed and no further RMDs were taken. This was just noticed by client. What experience have people had with IRS on issues like this?
Permalink Submitted by Alan - IRA critic on Wed, 2017-03-01 04:54
Usually, if client makes up the late RMDs ASAP and files Form 5329 for the year the RMDs were missed with a “reasonable cause” for the failure, the IRS will waive the penalty. Client needs to take out the shortfall before filing the 5329. If 2016 was the year of missed RMDs, the 5329 for 2016 can be filed with the 2016 return. The makeup distributions are taxable in the year received.