Missed the first RMD
A 76 year old tax payer retired in mid 2024. She has postponed distribution from all three retirement accounts by using a still working exception while employed. Since immediately after retirement, the 1st account has been sending monthly RMDs (bank deposit). The 2024 RMD of the 2nd account was taken in March, 2025. However, she assumed receiving monthly RMDs from the 3rd account, but discovered lately that 2024 RMD was not taken, no distribution yet.
1. Should she take 2024 RMD now or withdraw earnings on the amount, too? Is the account custodian knowledgeable in this matter?
2. Does she include 2024 RMD in 2024 income or in 2025 income (next year)?
3. Is it advised to take missed 2024 RMD separately from 2025 RMD?
4. Should she file form 5329 along with a letter of explanation for a penalty waiver? When and how to pay a penalty if necessary?
Permalink Submitted by Alan - IRA critic on Tue, 2025-05-20 00:27
How can there be 3 qualified plans from which the taxpayer was able to use the “still working exception”? This exception only applies to the plan of the employer from which the taxpayer has not retired.
401k and 457 plans must each satisfy their own RMDs. But if there is more than one 403b plan, the RMD for 403b plans can be aggregated between them. Therefore, the taxpayer needs to break down the RMD requirements for each plan, but when making up the shortfall, one 5329 for all accounts can be filed. For plans from which they retired in 2024 and 2024 became the first RMD year, that first RMD was not due until 4/1/2025, and if late a 2025 5329 should be filed, not a 2024 5329. If RMDs are delinquent for more than one year, they can be made up with a single distribution.
Any distribution taken is taxable in the year received. Any penalty for which a waiver is being requested should not be made unless the IRS does not accept the waiver request.
Permalink Submitted by learner on Tue, 2025-05-20 00:56
Thank you, Alan.
The retiree was employed in a state higher education and the institution offered a 403b plan at two custodians and a 457 plan, 3 in all. She has been taking RMD from the 1st 403b account, TIAA, since the termination of her employment and took a 2024 RMD from the 2nd 403b account earlier 2025. She missed taking 2024 RMD from 457b through a confusion. She has to take missed 2024 RMD. Does she have to file 2025 5329, not 2024? I believe the missed 2024 RMD will be included in 2025 income.
Permalink Submitted by Alan - IRA critic on Tue, 2025-05-20 10:23
Because any late 2024 RMD was not due until 4/1/2025, a 2025 5329 must be filed to request the penalty waiver. The same 2025 can include the missed RMDs (after they are made up if a waiver is requested) for all 3 plans.
The 2025 RMD for all plans must be completed by the end of 2025, or earlier for any plans that are rolled over to an IRA. Any distributions done in 2025 are automatically treated as 2024 RMDs to the extent the 2024 RMD has not been completed. QCDs can only be done from an IRA if charitably inclined, and in addition having one IRA would simplify all future RMDs.
The 403b RMDs can be aggregated, but not with the 457 RMD.