I failed to take the 2023 RMD on my IRA until Jan 2024. What do I do? Complete and submit Form 5329 separately? Do I still report the distribution on my 2023 return?

[fwharto1]

What does the correction window mean; 10% vs 25% tax penalty or a waiver of the tax penalty.  Do I just complete the Form 5329 and submit it separately and how do I report all of this on my 2023 return?

[dmertz · Accepted solution]

Correction within the correction window reduces the penalty from 25% to 10%.  However, you can still request a waiver of the penalty with Form 5329 to eliminate the penalty, in which case the penalty amount will not be included in your overall tax liability.  If the IRS later determines that you do not qualify for the waiver, the IRS will then bill for the penalty.

If you have entered a Form 1099-R for some other reason, after clicking the Continue button on the page that lists the Forms 1099-R that you have entered and TurboTax will eventually ask if you completed your RMD.  After indicating that you did not receive all of your RMD, TurboTax will ask you about the details and will provide an opportunity to request a wavier of the penalty based on now having completed the RMD.  If you do not have a Form 1099-R entered, you can make a dummy entry of a Form 1099-R, complete the request for waiver, then delete the dummy form.  TurboTax will retain the Form 5329 and explanation as long as you do not again go into the retirement section of TurboTax.

[dmertz]

The distribution itself made in 2024 will be reported and taxed on your 2024 tax return.  You'll receive the 2024 Form 1099-R near the end of January 2025.

[fwharto1]

Thank you for your response. I have successfully followed your guidance.  Much appreciated!!