Retirement Savings and Benefits
Questions and comments about IRAs, 401k accounts, social security, and other forms of retirement savings and benefits.
Late RMD
Posted by: kaneohe, November 2, 2017 06:06PM
Suppose you request the RMD on IRA in a timely fashion but custodian is late with distribution....request in 2016 but not withdrawn until early Jan 2017. Withdrawal will show up on 2017 1099R. Do you declare 2016 RMD income as 2017 income along w/ the real 2017 RMD.
Do you file 5329 for late withdrawal for tax yr 2016 or 2017? Or do you declare late 2016 RMD on 2016 tax return?

Re: Late RMD
Posted by: Art, November 2, 2017 06:47PM
The last time something like this happened to me, I would file a 2016 without reporting the RMD and also file a 5329 showing the penalty but not reporting the penalty amount on the 1040.

I would use the 5329 as the mechanism to ask for a full abatement of RMD penalty, explaining what happened and that the 2016 RMD has already been taken in TY 17. I would add that I have taken steps to avoid having this occur in the future.

Do not pay the penalty calculated but hope the IRS abates.

So for 2107 you will report on the 1040 both 2016 RMD & 2017 RMD.

This all assumes the RMD custodian will not change RMD payout year reporting.

Re: Late RMD
Posted by: Alan S., November 2, 2017 11:56PM
I agree, and since you will be self reporting the late RMD on Form 5329 with the penalty waiver, the IRS will almost certainly approve the waiver.

But unless this is entirely custodian error, the custodian will not report the late distribution on a 2016 1099R. In fact, even if this was custodian error, they will probably state that it should have been appealed much sooner than now.

Whether it is RMD or 72t plan distributions, any year end distribution should not be requested after 12/15 or there will be a risk that the distribution is not processed before year end with obvious negative implications.

Re: Late RMD
Posted by: kaneohe, November 3, 2017 02:06AM
Thanks, Art and Alan. Appreciate the help.

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