forgot RMD from inherited IRA
Client forgot to take the 1st RMD from inherited IRA in 2017. The company said it was the wrong form they signed in 2017 so no distribution went out.
a. Should they take the 2017 rmd now along with the 2018 RMD and pay taxes on both for 2018 tax return?
b. should they send anything form or letter into the IRS to let them know?
c. any options they have so they don’t get penalized?
thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Wed, 2018-04-11 23:07
They should take the 2017 RMD ASAP, the 2018 RMD anytime prior to year end. Both are taxable in 2018. Client should file form 5329 with 2017 return or by itself after the return to request the penalty waiver for “reasonable cause”. This should be done after making up the missed RMD. The IRS usually waives the penalty.
Permalink Submitted by Douglas Bauerband on Thu, 2018-04-12 15:44
I read the whole 5329 form. It only talks about the penatly in Part 9, I do not see any place to request a waiver of penalty for reasonable cause? Can you tell us where that is?thank you
Permalink Submitted by David Mertz on Thu, 2018-04-12 17:55
See the last page of the instructions for Form 5329 on how to prepare Form 5329 and your explanation to request the waiver: https://www.irs.gov/pub/irs-pdf/i5329.pdf