RMD Penalty Waiver
A client recently took over as POA for her 76 year old brother, who hadn’t taken his RMDs for 2018 or 2019. The client distributed the Combined amount in 2020, and 6 months ago just decided to pay the 50% penalty for each year by filing the 5329s. Is it too late to ask for a penalty waiver for each year?
Permalink Submitted by Alan - IRA critic on Fri, 2021-01-15 14:38
Not sure. The current instructions are not to pay the penalty if requesting a waiver, which reflects the IRS intent to waive the vast majority of these penalties, but they may not want to have to return penalty payments. Once they have the penalty in hand it may be harder to get the waiver, but no harm in trying. Amended 2018 and 2019 5329 forms should be completed and sent in together with a letter explaining why brother missed those RMDs, and why the penalty was paid, but requesting the waiver and return of the funds. Too few of these cases to predict what IRS decision is likely. Client should be sure to fill in the forms correctly. There is only 4 lines, but what goes on each is not intuitive. Check the 5329 Inst.