My IRA was changed from a bank to an investment co in 2021 and neither party paid an RMD. It was paid Jan 2022. How do I handle as I have no RMD stmt from either party?

[DianeW777]

Here is the information you need. If the RMD was received in January, 2022, then there is nothing to report in 2021. It will be reported in 2022 along with the RMD for 2022.  You may be charged a penalty unless you can have the company correct the mistake and issue a 1099-R for 2021.  If they actually made the payment in December, 2021, and you didn't receive it until January, 2022, then you should be getting a Form 1099-R.

Action Steps:

IF you receive the Form 1099-R in 2022 you will need to file a 5329 form and request a waiver of the penalty. (The waiver would only be denied if there is no reasonable explanation and the missed RMD was not taken at all.)

• Waiver of tax for reasonable cause. The IRS can waive part or all of this tax if you can show that any shortfall in the amount of distributions was due to reasonable error and you are taking reasonable steps to remedy the shortfall. If you believe you qualify for this relief, attach a statement of explanation and file Form 5329 as follows.
  1. Complete lines 52 and 53 as instructed.
  2. Enter “RC” and the amount of the shortfall you want waived in parentheses on the dotted line next to line 54. Subtract this amount from the total shortfall you figured without regard to the waiver, and enter the result on line 54.
  3. Complete line 55 as instructed. You must pay any tax due that is reported on line 55.
• The IRS will review the information you provide and decide whether to grant your request for a waiver. If your request is not granted, the IRS will notify you regarding any additional tax you may owe on the shortfall.
  • Instructions Form 5329 - It would be unusual for you to be denied relief because you have a situation where this could easily be missed.

[dmertz]

The Form 5329 that needs to be filed to request a waiver of the 50% excess-accumulation penalty is a 2021 Form 5329, filed with your 2021 tax return.

Note that if 2021 was the year that you reached age 72, the deadline to receive the 2021 RMD is April 1, 2022 and taking this distribution by then would mean that there was no excess accumulation for 2021 that would need to be reported.

[Opus 17]

Income is reported when you actually receive it, so you have no IRA income to report for 2021.

But, you do need to file a penalty form 5329 with your tax return to report that you failed to take the RMD, but you took it as soon as you realized the mistake in January, and request a waiver of the penalty.  

Then, since you are counting the January 2022 withdrawal as your 2021 RMD, you will need to take another withdrawal sometime in 2022 to satisfy the 2022 requirement.  You will get one 1099-R next year reporting the total you withdrew in 2022.  Remember that an RMD is not a specific transaction, it is just the minimum amount you must withdraw based on your age and account balance.  You could always withdraw more.  If your RMD was $5000, that would be satisfied if you withdrew $5000 on December 29, but it would also be satisfied if you withdrew $500 per month for living expenses, or if you withdrew $10,000 in June to buy a new car.  You don't have to take an extra specific RMD withdrawal in December if you have already withdrawn the required amount (or more) during the year.