RMD non-distribution

Forum|Forum|6 years ago
January 24, 2020
2 replies
45 views

I forgot to make an RMD for last year. Which would be better for IRS processing (and me!):

1. Prepare 5329 with written excuse and snail mail to IRS; then do 1040 as usual and E-File, or

2. Just do 1040 and hope I can find 5329 in Turbo Tax to electronically E-File; and, if so, how would I send my separate written excuse?

thanx,

steve

Best answer by dmertz

You must include Form 5329 Part IX with your tax return. You must not mail it separately.

Take the late RMD as soon as possible, before you file your tax return. In TurboTax:

Click the Continue button on the Your 1099-R Entries page.
Indicate that you did not receive all the RMD for 2019.
Enter the total amount required to be taken and the amount you actually received.
Verify that the amount that TurboTax indicates as the amount that on which you want the 50% excess accumulation penalty waived is the same as the amount that you will now have taken late. and provide an explanation as to why you took the distribution late at that you have now taken the RMD, albeit late. ("I forgot" is probably sufficient reasonable cause. The IRS mainly seems to want to know only that taking it late was not intentional.)

TurboTax will include in your e-filed tax return the explanation and the Form 5329 requesting the waiver of the penalty.

The late-taken RMD will be taxable on your 2020 tax return along with your 2020 RMD.

MaryK4

Level 15

You want to use #1- You can prepare the Form 5329 for 2018 and mail with your written explanation. If there are no other changes to the tax return you can mail it alone. You can prepare and efile 2019 normally.

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dmertz

Level 15

File Form 5329 with your tax return. Do not send it separately unless you've already filed. TurboTax will ask you to provide an explanation which will be included in your e-filing.

Assuming that this was not an RMD to be paid to you as beneficiary of an inherited retirement account, if 2019 was your first RMD year, your 2019 RMD is not yet late and there is no need to file Form 5329. You have until April 1, 2020 to receive your first RMD.

sigie148Author

Level 2

Thanx for replying, BUT:

1. this is not and inherited IRA but a rollover from my old 401K,

2. and regretfully, this is my 2nd required withdrawal, and subject to a back lashing from IRS.

So to re-clarify: should I do 1040 and E-File, ignoring the 5329 on it (How would I import my explanation into Turbo Tax so it will ride with the E-File); or do the 5329 and explanation and send them separately via hard paper snail mail?

Sigie148

betsy-yalcin

Level 2

Yes, TurboTax makes it extremely difficult to get Form 5329 included under these circumstances where you have no Forms 1099-R to enter or you are under age 70½. If you are using the CD/download version of TurboTax you can do it in forms mode. In the online version of TurboTax you would need to do a convoluted workaround in step-by-step mode:

Change your year of birth to something that indicates that you are over age 70½, say, 1945.
Enter a dummy Form 1099-R for a regular IRA distribution: Box 1 and 2a = $1, code 7 in box 7 and the IRA/SEP/SIMPLE box marked and indicate that it was all RMD.
Click the Continue button on the Your 1099-R Entries page.
Indicate that you did not receive all of the RMD.
Enter the amount that you should have received and the amount actually received, then click Continue.
Enter your explanation statement
Delete the dummy Form 1099-R. Do not click the Continue button on the Your 1099-R Entries page, otherwise TurboTax might delete the Form 5329 and you'll have to start over.
Change your year of birth back to the correct year.

If all else fails, prepare Form 1099-R manually and include it and your explanation with your mailed tax return.

dmertz, Thank you so much!

Before seeing your response, I tried finding the form 5329 inside TurboTax, to see if I could fill it in directly. That seemed to work, I was able to put the amount of RMD that should have been taken, and the explanation for waiver of tax penalty. Although I saved the completed form, I don't know if it will hold onto it, since I didn't complete the 1099-R section. I will experiment and see if the form stays in my final return, prior to submitting the filing. If that doesn't work, I will try the strategy you recommend. Thanks again, it is a bit of an adventure!