MRD

[Patrick Michael]

Client did not take his Minimum Required Distribution from his IRA in 2012. He told me his financial advisor told him he could sign a waiver form that exempted him from taking the distribution. He signed the waiver but does not have a copy of it. I can not find anything stating that a person can waive taking a MRD in 2012 (apparently there was a waiver in 2009 but that has expired). Before I call his advisor I want to see if anyone more knowledgeable than me on this matter knows of any waiver for 2012.

As always, thanks for the education.

Pat

[jainen]

>>he could sign a waiver form that exempted him from taking the distribution<<

Close, but not close enough. The form undoubtedly only said he waived the distribution from THAT bank because he would satisfy the RMD requirement at ANOTHER bank. (He can take his RMD from any combination of IRA accounts, but the total still has to add up.)

If you're a big jerk like me, add .a 50% penalty. Most preparers would probably let sleeping dogs lie. If you want to make sure IRS notices, tell the client to immediately withdraw the amount and request a genuine waiver (due to bank error). See the instructions for Form 5329 Line 52.

[jasdlm]

I just did one of these. Client actually met with his financial advisor in August and thought he took his minimum distribution, but it was never actually transferred to his after-tax account. I called him when I did not see a 1099 when preparing his taxes. He called the adviser and discovered the transfer didn't actually happen. I did have him immediately withdraw the amount required, and I prepared a 5329 and completed Line 52, which I thought was the appropriate way to handle it. This is the first time I have had this happen with a client. I haven't efiled yet. Jainen, in your experience, is this not a very successful strategy? Is there something else I should do?

Thanks much.

[jainen]

>>is this not a very successful strategy?<<

I expect it is. In my observation IRS is generally lenient about abating penalties, and this waiver is built right into the form and instructions. IRS doesn't want the bad publicity of punishing someone's grandmother for living frugally when the mean ol' bankers trick her into keeping her money. A good faith effort to comply is all they are looking for.

[jasdlm]

Thanks much. I'll submit the efile.