RMD

If 100% of your IRA investment is invested in illiquid real estate, can you defer your RMD until the property is sold?



  • Not without exposure to a possible 50% penalty, but if there is another IRA account, that other account could satisfy the RMD for both accounts. If the IRA is actually selling the property, you might delay the RMD, then make up the RMD next year and file Form 5329 to request that the IRS waive the penalty after the late RMD is made up, but there is no guarantee the IRS would grant it. The waiver request would have to be worded carefully, and another reason for the waiver should be used if possible (eg illness, etc) to improve the chances of the waiver. That said, the IRS knows the IRA holds real estate due to Form 5498 completion requirements for the custodian.
  • The self directed IRA should contain enough cash to cover all expenses related to the property, such as insurance, legal costs, repairs, property taxes, etc. since payment of any of these costs with outside money is a prohibited transaction. Seems like the RMD for this account might be funded with cash in the IRA for the RMD, but if the property is not generating current rental or other income, then this would not be a sustainable solution.

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