Randall Posted February 10, 2009 Report Share Posted February 10, 2009 Client has IRA account statments (one each for both spouses) for January 2009 showing distributions on 1/9/09. No 1099Rs for 2008. He says the checks received in Jan09 are for 2008 distribution. I seems he's 9 days late on his RMD. Do I calculate penalty on 5329 or does he just wait for the IRS to assess penalty. Is there a remedy? Can he get the penalty waived? Then if so, how is it reported? I'm thinking if he gets distribution in Dec09, he'll have a 1099R for 2009 showing total of two distributions. Anyone have experience in something like this? Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 10, 2009 Report Share Posted February 10, 2009 >>He says the checks received in Jan09 are for 2008 distribution<< First determine if he really must take a distribution for the year 2008 or does he simply mean the 2009 distribution he received is calculated on the 2008 balance of accounts. If he was required to take a distribution in 2008 you would need to file Form 5329 filling out part VIII to calculate the penalty due. Then with the form request waiver due to reasonable cause of _____. Distribution are reported on 1099-R in the year actually disbursed and would therefore be taxable in that year. Yes, that can cause two years taxable in one. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 10, 2009 Report Share Posted February 10, 2009 Isn't there a new law from the bank bailout that waives the requirement for RMD's in 2008. I thought (always a scary thing) that I read that in the highlights of the law. I think I have a PPC email that I read that in. Don't go off my word. Check it out for yourself, but I am sure I read that. It may be in the new bill that is in congress right now, but I think it was in the bank bailout bill that already passed. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
JRS Posted February 11, 2009 Report Share Posted February 11, 2009 From the Tax Book:New law. No RMD is required for calendar year 2009 from IRAs and employer-provided qualified retirement plans that are defined contribution plans (including 401(k) plans). The next RMD is for calendar year 2010. This relief applies to lifetime distributions to employees and IRA owners and after-death distributions to beneficiaries. Example 2: Jerry turns age 70½ in 2009. Under the new law, he is not required to take RMD by April 1, 2010. However, he is required to take RMD for 2010 by December 31, 2010. If Jerry were to die on or after April 1, 2010, the RMD for his beneficiary would be determined using the rule for death on or after the individual’s required beginning date. I couldn't find anything for 2008, but I haven't finished looking. Quote Link to comment Share on other sites More sharing options...
Bart Posted February 11, 2009 Report Share Posted February 11, 2009 I couldn't find anything for 2008, but I haven't finished looking. It is not available for 2008 even though it should be. Quote Link to comment Share on other sites More sharing options...
MN2V Posted February 11, 2009 Report Share Posted February 11, 2009 Prepare the client for the worst...Penalty is 50% of what should have been withdrawn and I have never had any luck asking for forgiving the penalty. The thing is you have to send the amount in with the 5329 and they will send it back if they feel like it... Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 11, 2009 Report Share Posted February 11, 2009 Prepare the client for the worst...Penalty is 50% of what should have been withdrawn and I have never had any luck asking for forgiving the penalty. The thing is you have to send the amount in with the 5329 and they will send it back if they feel like it... I recently had the penalty for a distribution from a deceased IRA account. I filed form 5329 calculating the penalty, did not send payment and attached a request for waiver of the penalty due to reasonable cause. The IRS waved the penalty. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 11, 2009 Report Share Posted February 11, 2009 I've handled the problem in the past as Old Jack did and the IRS waived it. taxbilly Quote Link to comment Share on other sites More sharing options...
Randall Posted February 11, 2009 Author Report Share Posted February 11, 2009 I recently had the penalty for a distribution from a deceased IRA account. I filed form 5329 calculating the penalty, did not send payment and attached a request for waiver of the penalty due to reasonable cause. The IRS waved the penalty. Thanks for all the comments. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 11, 2009 Report Share Posted February 11, 2009 You might want to add that the elderly client had read somewhere that the RMD was not required by a new law. Because he is elderly, he mixed up the years. As soon as he found out he made the mistake, he corrected it. Sounds like reasonable cause to me. You know, like the Secretary made an honest mistake and corrected it. If it is good for him, why not your client? Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 11, 2009 Report Share Posted February 11, 2009 Because he is elderly, he mixed up the years. Oh Please! That would imply that those of us that are taking RMDs are all elderly and mixed up. I really don't think I am elderly or mixed up, but then again, maybe I am? Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 11, 2009 Report Share Posted February 11, 2009 Old Jack: Elderly, yes, but not mixed up ! :~) taxbilly Quote Link to comment Share on other sites More sharing options...
thewizardof Posted June 16, 2011 Report Share Posted June 16, 2011 It looks like in the first year that you turn 70 1/2 you get an extra 4 months to make the RMD, so the check from 1/9/09 is for 2008. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted June 16, 2011 Report Share Posted June 16, 2011 It looks like in the first year that you turn 70 1/2 you get an extra 4 months to make the RMD, so the check from 1/9/09 is for 2008. Three months not four. taxbilly Quote Link to comment Share on other sites More sharing options...
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