Withdrawals from IRA and 401K in 2022

Submitted by alberto vega on Wed, 2023-06-21 17:32

Taxpayer was 75 years old in 2022, started taking RMD from traditional IRAs and solo 401k plan separately from age 70.
In 2022 because the 401K was invested primarily in stocks which had decreased in market values
taxpayer took the year 2022 $1,650 RMD from the 401K from one of the traditional IRA’s

1. Is that allowed?
2. If not allowed how does taxpayer correct it



Submitted by Alan - IRA critic on Wed, 2023-06-21 18:26

  • No, a 401k RMD cannot be satisfied with an IRA distribution. I am surprised that the 401k plan did not force out the 2022 RMD, as the plan has now violated Sec 401(a)(9), and needs to distribute both the 2022 RMD and the 2023 RMD this year. Taxpayer also needs to file a 2022 5329 to request the penalty waiver after making up the late 401k RMD.
  • If 1,650 extra was taken from the IRA last year, that is taxable and it is too late to roll it back.

Submitted by David Mertz on Wed, 2023-06-21 20:24

Being a solo 401(k), it might be that the trustee relies on the individual to ensure RMD compliance.

Submitted by alberto vega on Mon, 2023-06-26 17:03

So the participant can then in 2023  take the 2022 RMD and the 2023 RMD from the 401K.1.  Should taxpayer take one withdrawal  or  2 withdrawals separately to show the 2022  was   taken in 20232. Can the form 5329 be filed in 2023  by what date with the request for penalty waiver.  What lines in the form 5329 should be used to request the penalty waiver

Submitted by Alan - IRA critic on Mon, 2023-06-26 17:52

  1. The 2022 and 2023 RMDs can be combined in a single distribution, and the 1099R will combine that whether taken at the same time or not. This will be taxable in 2023. The 2022 5329 can be filed as soon as the 2022 RMD has been made up.
  2. Form 5329 for 2022:  RMD amount on line 52, Line 53 is 0, Line 54 should show the RMD amount and “RC” on the dotted line, and 0 on line 54 itself. A separate statement can include the reason for the shortfall, and the date and amount that shortfall was distributed. The 5329 should be attached to a 1040X for 2022 unless the 2022 return has not yet been filed.

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