75 year old retired teacher has $66,000 in 403-b. Major TSA company has not sent RMD letter ever! [My wife has same company and even phone calls we made, this TSA company will not send RMD January letters]. Just ran into client. Any way to mitigate the 50% non-withdrawal penalty? If so or if not, what suggestions do I offer client to solve her problem? I would think I need to find a CPA with extensive IRA knowledge. How do I find one for NE Ohio? Thanks
Are you concerned with just filing the 5329 forms or dealing with the 403b administrator, which goes beyond the tax prep process and most CPAs would probably only complete the 5329 forms once all the late RMDs were made up. I should add that if the 5329 forms are completed correctly, the IRS will almost always grant the penalty waiver. No penalty should be paid when filing the 5329 forms.
Simply the 5329 forms. I called my tax preparer, a CPA, and he deals with these forms constantly. Taking on the 403-b administator is something I would rather not touch at all. Simply would like to waive the penalty for her.Again, thank you!
Yes, but the late RMDs must all be distributed before the 5329 forms can be filed. You have to be able to state that these RMDs have been made up. SInce the correct RMD for a year is based on the prior year end balance which the teacher might not have, that balance would have to be provided the the plan, as well as any year end 1986 balance that would not have been subject to RMDs until this year.
Permalink Submitted by Alan - IRA critic on Fri, 2019-04-19 15:26
The teacher can take the RMD in any combination from 403b plans if client has more than this one. In addition, any portion of the 66k that was in the plan on 12/31/1986 is not subject to RMDs until age 75. However, this is no excuse for not contacting the client at all. The client first needs to determine what the RMDs are for this account and send a letter requesting immediate distribution. Client may also want to do a direct rollover to an IRA to eliminate future issues, but must resolve the RMD situation first. Once the RMDs are distributed, client should complete Form 5329 for each year and request the penalty be waived for reasonable cause. There are only 4 lines to be completed on each 5329, but client should check the details for completing these lines on the last page of the 5329 Inst. Don’t see any need to contact a CPA given these instructions.
Permalink Submitted by Harve Senter on Fri, 2019-04-19 15:41
Fast response. Thank you. Any clue on finding a CPA that knows what he/she is doing with IRA accounts? Simply start calling and ask for 5329 experience?