First RMD taken in 2019, now more needed in 2020.

[audiojr]

Initial RMD taken in 2019, now more needed in 2020.

My wife turned 70 in May of 2019 (70 1/2 in Nov.) We calculated the various RMD amounts and withdrew the required sums (also withheld 10% for anticipated tax), all before the end of 2019.

In January we received notice that she also has a 5yr. IRA CD which matures on March 14, 2020 and is subject to an RMD for 2019 (a pleasant surprise!). We have entered all the info from the 1099-Rs into TT, but did not file the returns yet. 

Since I can't touch the funds in this IRA til after March 15 without penalty, my plan is to withdraw the RMD amount from her IRA invested in mutual funds before April 1,2020 and identify it as an RMD for 2019. Several questions arise regarding this plan:

a.:  The mutual fund we will use was already reported as paying out all of her RMDs for 2019. Will they issue a revised 2019 1099-R, or a new one? (I would like to file my 2019 return using the existing 1099-R soon).

b.:  Should I mention this anywhere in the 2019 (If so, where)?

c.:  any alternate suggestions would be greatly appreciated.

Thanks,

audiojr

[fanfare]

you'll get  a second  2020 1099-R in 2021 for your withdrawal.

This doesn't affect your 2019 return.

[fanfare]

Answer corrected and revised.

[dmertz]

The 2020 Form 1099-R for distributions from the mutual fund that will get reported on your 2020 tax return will include the portion of the 2019 RMD taken in 2020 plus whatever portion of the 2020 RMD is taken from that account before the end of 2020.  As fanfare implied, only the distribution that occurred in 2019 gets reported on your 2019 tax return.

Note that most IRA CDs permit distributions of RMDs without incurring a CD early-withdrawal penalty.  If you would rather take an RMD from the CD, check the CD IRA agreement to see if this particular CD IRA allows this.

[TomD8 · Accepted solution]

No worries.  As long as your wife takes her 2019 RMD by April 1st, she is in full compliance with the  law.

No need for a corrected 1099-R.  Your 1099-R is correct since it shows the distribution you actually received in 2019.  There is nothing to correct.

As @fanfare stated, the reminder of her 2019 RMD will be reflected in the 2020 1099-R that she will receive next year.

When you enter the 2019 1099-R in TurboTax, just check the box that the distribution is all RMD.  It is not all of the RMD, but it is all RMD.

By the way, some banks will waive the early withdrawal penalty on a CD IRA if the withdrawal is made to satisfy RMD requirements.

[jlint3024]

Since the entire RMD for 2019 was not taken in 2019, does a form 5329 need to be filed showing the amount of the RMD not taken in 2019, with the explanation that the RMD will be taken prior to 1 Apr 2020, and the additional tax owed is zero. ?

[Critter]

No 5329 is required.  

[MayaD]

If the RMD was due by December 31, 2019, fill out form 5329 to request the waiver of penalty.

[Edited 02/12/2020| 02:49 PM PST]

[dmertz]

jlint3024, if the Required Beginning Date for RMDs is April 1, 2020 as seems to be implied by your question, your RMD is not late and no Form 5329 or explanation is required.  If your RMD was required to have been completed by December 31, 2019, yes, you must file Form 5329 and request waiver of the penalty after you complete the late RMD.

[TomD8]

A taxpayer's first RMD must be taken by April 1st of the year after turning 70 1/2.  As long as they meet that deadline, no 5329 is necessary.

Subsequent RMD's must be taken by December 31st of each year.