Calculating missed RMDs
I recently found out that my father has not been taking RMDs from an inherited Roth IRA he received from his father in 2006. In trying to help him calculate the missed RMDs so he can fix this, I’m wondering if it would be correct to make any adjustments to the 12/31/PY balance for the corrected prior year RMDs being withdrawn.
For example, if the 12/31/18 balance was $32,111, he would have been required to take $1,923 in 2019 per the table. Yet, if we remove all the prior year RMDs that will have been taken from the balance, it would now be $18,928 with a RMD of $1,133. By taking all of the RMDs now based off of the actual balance each year, we’re effectively double-counting much of the balance and the distributions in later years are significantly larger than if he had taken the RMDs on time. Is this just part of the consequence for not taking timely RMDs, or is it appropriate to adjust the balance for the calculations?
Permalink Submitted by Alan - IRA critic on Sun, 2025-03-02 11:56
Almost everyone simply uses the actual year end balance and that is what the IRS expects. If the year end balances are adjusted for later RMD distributions which the IRS mentioned in guidance a few years back, the IRS may also expect those RMDs to be adjusted for gain or loss in the IRA after the missed RMDs and that would be very complex, so you should stick with the typical simple method.
Note that making up missed RMDs (except for 2009 and 2020 which were waived), will require a Form 5329 with 1040X to be filed for each such year to request waiver of the penalty for reasonable cause.