I received my email notice of my 2022 RMD in December 2021 as usual. I find that the custodian did not distribute that RMD. What should I do?

[hb37120201040]

I have contacted them and they are distributing it very soon. (It is 14 April 2023.)  What do I need to file in my 2022 taxes.  I'm using TurboTax online Premier.  

[DianeW777 · Accepted solution]

Here is the information you need. If the RMD is received in April, 2023, then there is nothing to report in 2022. It will be reported in 2023 along with the RMD for 2023.  You will be charged a penalty.

Action Steps with no Form 1099-R:

You must include form 5329 when you e-file and Unfortunately this can only be done using the "Forms" mode which is only available with TurboTax CD/Download if you do not have a 1099-R to file.

You can change to TurboTax Basic CD/Download if you choose.

• How to switch from TurboTax Online to TurboTax CD/Download?

Once this is completed here are the steps to add Form 5329 to your return.

1. Enter the forms mode and click on open form (left). Type in 5329.
2. Choose 5329-T for the taxpayer (first person listed on your tax return), or 5329-S (for spouse - 2nd person on tax return)
3. Scroll down to Part IX line 52 and enter the RMD amount that should have been taken.
4. On line 53 enter the amount of the RMD that was actually taken (probably zero if it was missed).
5. Then in the box right under line 53 "Waver of Tax Smart Worksheet" enter the same amount as line 52 (the RMD amount). Then click the "Explanation" button and enter the reason for missing the RMD and your statement requesting a waver.

You will not pay any penalty now until the IRS determines if it will grant the waver, then they will inform you if you owe the penalty.

Alternative for TurboTax Online: Print, complete and mail Form 5329 by April 18th since it is a signature form and can be mailed separately (click the link for form and instructions).

Action Steps with a 1099-R:

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.

[hb37120201040]

DianeW777,

I followed your detailed instruction and it worked perfectly!  Thanks so much for helping me with exactly what I needed.  I've used this community in the past and have always been very happy with the speed and accuracy of the help.  I appreciate this feature almost as much and the "start your return with last years information" feature.  One thing that I noticed with the down loaded version of Premier is the old feature of entry by entry comparison with prior year.  I find this very helpful with 1099 income reporting.  Now that most 1099's come electronically, it helps me not miss anything.  I'd like to see that in the online version.

Thanks again.