2 yrs of under RMD withdrawals
new client.
Past 2yrs of 2016 and 2017 he took RMD but not the correct amount. He was off by a total of $14,346.
He was under in 2016 by $4,418 and 2017 by $10,018.
He is in a panic that the IRS will hit him with a 50% penalty.
He is on track for his 2018 RMD
Should we sent in a 5329 form for him and see if the IRS extends a waiver?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Tue, 2018-06-19 23:08
First he must make up the shortfall before filing the 5329 for each year. If the forms are filed correctly, shortfalls made up and almost any reasonable explanation is made for the shortfall, the IRA almost always waives the penalty. At this point he might as well just distribute the entire shortfall plus the 2018 RMD, then send in the 2 5329 forms. Be sure lines 54 and 55 are completed correctly per the 5329 Inst. Just looking at the form itself will probably result in an error.