@jackplym wrote:
I have a similar but slightly more complicated issue. Three years ago, Schwab switched part of my IRA to a separate account. Then for tax years 2018 and 2018 they did not withdraw an RMD for that separate account, only for the balance of the original account. I did not realize that their issued 1099-R did not include the new separate account and so did not report it. I just discovered the problem. I have already filed my 2019 taxes. My interpretation of this thread, as well as IRS Instruction, etc. is that I should:
1-Take the required distributions ASAP as a regular withdrawal,
2-Use Turbotax to prepare 1040-X amended returns for 2018 and 2019 with the year appropriate 5329’s. File paper forms. I use desktop version of TT.
3-Include the required taxes due (not any penalty) with the 1040-X’s.
Am I on the right track?
You are not.
#3 - There should be no additional tax due. You must take that distribution in 2020 so that distribution and the tax must be paid with your 2020 tax return next year. You ask for a waiver of the penalty with the 5329 form and to not pay the penalty so there should be no change in the tax at all for 2018 & 2019.
First, it does not matter what "account" the RMD was taken from as long as the total RMD amount based on the total value of ALL accounts was satisfied. If it was not, then you need to take the combined 2 year shortfall RMD amount from any of your Traditional IRA accounts ASAP.
Then prepare 5329 forms for each missed year (2018 & 2019 if those years were missed) as in the above discussion, and attach an explanation as yiu just explained it. Then mail the stand alone 5329 form to the IRS (I would use a tracking service or certified mail with tracking). No need to amend 2019 since you are not changing anything, only sending an additional original 5329 form late that should have been part of the tax return but was not. (Sending a late form that does not change the original return that can be filed by itself does not require amending the original tax return if nothing changes).
If you wish to amend and send the 5329 forms and explanation with a 1040X you can do so if you want to.)
https://www.irs.gov/pub/irs-prior/f5329--2018.pdf
https://www.irs.gov/pub/irs-prior/f5329--2019.pdf
https://www.irs.gov/pub/irs-prior/i5329--2018.pdf
https://www.irs.gov/filing/where-to-file-addresses-for-taxpayers-and-tax-professionals-filing-form-1...
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
