Missed RMD 2020 and 2021

[rgdid10t]

My parents appear to have missed RMD on one of their IRAs for 2020 and 2021.   I have two questions.

The first is in 2020 they also took a full distribution from some sort of annuity.  However, the 1099-R indicated 7D for the distribution type so based on my reading, this was non-qualified so would not have covered the RMD from the other IRA.  Does that sound correct?   My parents never received any notice for failing to take the RMD in 2020 and I thought they would have by now if they really missed RMD?

The second question is about filing the correct paperwork to request fee waiver from the IRS if they do need to correct for 2020 and 2021.  I have found contradictory information when I have looked about how to handle.  One blog I looked at said that a 5329 for 2020 must be completed and submitted with an amended 2020 tax return for the missed RMD in 2020 along with a separate 5329 for 2021 filed with 2021 taxes.  Another site claimed that a 5329 can be filed with 2021 taxes indicating total missed RMD for both 2020 and 2021.  I tend to think the first blog is correct because the line on 5329 asking about RMD refers to the current tax year when asking about missed RMD amount but I would like another opinion.

[macuser_22]

ode "7D" is a normal distribution from a non-qualified annuity that does not have any RMD requirement.

(Only IRA's, employer plans and pensions have RMD's).

[rgdid10t]

I thought I would update my post since no one else responded.  macuser_22 was correct in their assessment of the non-qualified annuity distribution but what we both missed is that the CARES Act waived RMD distribution requirements for 2020 so there was no requirement to take RMD in that year.  RMDs requirements are back in force for 2021 so I will have my parents file form 5329 with their 2021 taxes indicating the RMD for 2021 has now been taken, explaining the circumstances and requesting waiver of the penalty for 2021.

[macuser_22]

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@rgdid10t wrote:

I thought I would update my post since no one else responded.  macuser_22 was correct in their assessment of the non-qualified annuity distribution but what we both missed is that the CARES Act waived RMD distribution requirements for 2020 so there was no requirement to take RMD in that year.  RMDs requirements are back in force for 2021 so I will have my parents file form 5329 with their 2021 taxes indicating the RMD for 2021 has now been taken, explaining the circumstances and requesting waiver of the penalty for 2021.

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Again, code 7D is a non-qualified annuity that has no RMD requirement.   Non-qualified annuities are funded with after-tax money and are never subject to RMD's reguardless of the year. 

[rgdid10t]

Yes, but you missed the context of my original question which was whether that non-qualified annuity distribution covered the RMD for a qualified IRA for which the RMD was not taken.  I completely agree that since the distribution was non-qualified, it did not count toward any RMD and had no RMD requirement itself and appreciate that confirmation but if you look at my original question, it was actually about RMD being missed on an IRA, not on the non-qualified annuity.  I only mentioned the annuity in seeking confirmation that the distribution from it could not cover the RMD missed from the qualified IRA.

Had the CARES act not waived RMD requirements for 2020, there would have been missed RMD on the IRA because there were no distributions from that IRA or any other qualified plan which covered it.  Because of the CARES act, the whole question is moot for 2020 and I only need to worry about the missed RMD on the IRA in 2021.

[macuser_22]

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@rgdid10t wrote:

Yes, but you missed the context of my original question which was whether that non-qualified annuity distribution covered the RMD for a qualified IRA for which the RMD was not taken.  I completely agree that since the distribution was non-qualified, it did not count toward any RMD and had no RMD requirement itself and appreciate that confirmation but if you look at my original question, it was actually about RMD being missed on an IRA, not on the non-qualified annuity.  I only mentioned the annuity in seeking confirmation that the distribution from it could not cover the RMD missed from the qualified IRA.

Had the CARES act not waived RMD requirements for 2020, there would have been missed RMD on the IRA because there were no distributions from that IRA or any other qualified plan which covered it.  Because of the CARES act, the whole question is moot for 2020 and I only need to worry about the missed RMD on the IRA in 2021.

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Yes a IRA RMD distribution can only come from an IRA.