Late RMD

[Randall]

Client arranged to receive RMD in December.  Messed up by Fidelity, didn't get the distribution until January.  No 1099R for 2021 but the 1099R for 2022 will have two distributions.  He has letters from Fidelity admitting it was their fault.  I had this situation some years back.  I completed 5329 for the current year tax return, showing penalty and requesting it be waived which it was.  Showed the total (both distributions) the following year.  The amount in the past was small and didn't cause any tax.  Current client says he's ok with paying the tax on both distributions in 2022 but wants the penalty waived of course.  This seems to be the way to report everything.  Anyone know of another way to report the income in 2021 without a 1099R for 2021 and double the amount on 1099R in 2022?  

[TAXMAN]

I have read on this site before where some file without the penalty as long as the error was fixed in a timely manner. 

[kathyc2]

As long at it was oversight and missing distribution is taken before filing return, they won't assess the penalty.  From 5329 instructions:

Waiver of tax for reasonable cause.

 

The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows.

Complete lines 52 and 53 as instructed.

Enter “RC” and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54.

Complete line 55 as instructed. You must pay any tax due that is reported on line 55.

The IRS will review the information you provide and decide whether to grant your request for a waiver. If your request is not granted, the IRS will notify you regarding any additional tax you may owe on the shortfall.

[Randall]

Thanks.