Required Minimum Distribution (RMD)

[gnubari]

I was NOT made aware of my RMD requirement until my Annuity sent me a statement showing I needed to take an RMD for last year (2019).  I have gone to my Annuity Advisor (AA) and requested the 2019 distribution.  I did not receive a form 1099R about this.  I am going through my taxes for 2019 and it says that I may be penalized for not taking it, but if I take it before 4/1/2020, I am in compliance.

Please tell me how to properly answer the questions about RMD 2019 taxes?

[DavidS127]

It depends.  If 2019 was the year you reached age 70 ½, you have until April 1, 2020 to make the required minimum distribution (RMD), and the distribution is included on your 2020 tax return.  In that case, you answer that you took the RMD and then make sure you withdraw the RMD for 2019 it by April 1, 2020.

Then, remember that you need to take the 2020 RMD by December 31, 2020.  The 1099-R for both distributions (or one if you combine them into one distribution by April 1, 2020) will be entered on your 2020 tax return.

If you reached age 70 ½ before 2019, the deadline for your 2019 RMD was December 31, 2019.  If you missed that deadline, you owe a 50% excise tax on the RMD amount not withdrawn by that date.  That 50% penalty is reported on Form 5329 in the year you actually receive the RMD you missed.  You should take the RMD as soon as possible.  You'll get a 1099-R for that, to be entered on your 2020 tax return.

But, if you believe you missed the deadline due to reasonable cause, you can request a waiver in a letter of explanation which you attach with your return along with Form 5329.

[dwbkjb]

If you request a waiver for not taking the entire RMD, does this trigger an audit?

[DaveF1006]

"Usually if you made a waiver request, IRS will notify you if it is denied". Please review this link, and read section 2-Request a Waiver.

[srblue]

Need help with form 5329 part IX in Turbo tax Premier. 

My wife missed the 2019 RMD date of 12-31-2019 because of a screw up with Fidelity. I am willing to file from 5329 by hand as Turbo tax will not provide but I need to know where to add the additional tax from 5329 part IX line 55 in Turbo tax? I am filing 1040-SR and it say to use schedule 2 line 6. Additional tax on IRA.

SRBLUE

[DaveF1006]

I would advise just using the Turbo Tax program.  The program will determine the penalty for not taking an RMD and will automatically generate the 5329. 

[macuser_22]

---

@DaveF1006 wrote:

I would advise just using the Turbo Tax program.  The program will determine the penalty for not taking an RMD and will automatically generate the 5329.   And there is no penalty when requesting a waiver.

---

Dave, I have been complaining about this for years.  TurboTax will NOT prepare a 5329 UNLESS there is a 2019 1099-R for that spouse to file - there is just no way in TurboTax to get to that section of the interview without having a 1099-R, so if the 2019 RMD was missed and there is no 2019 1099-R, the 5329 can only be prepared by hand and attached to a mail tax return.    With the desktop versions it is possible to fill out a 5329 in the forms mode.

I have a procedure for the since it comes up every year.

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.)

Unfortunately this can only be done using the "forms" mode that is only available with the desktop software if you do not have a 1099-R to file.

If you do have a 2019 1099-R to report then the RMD question in the interview will go to the form 5329 waiver interview if you say that the 2019 RMD was not taken.

If you are using the CD/download version:

Enter the forms mode and click on open form. Type in 5329. Choose 5329-T for the taxpayer (first person listed on your tax return), or 5329-S (for spouse - 2nd person on tax return).

Scroll down to Part IX line 52 and enter the RMD amount that should have been taken. On line 53 enter the amount of the RMD that was actually taken (probably zero if it was missed).

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.

OR - if using the Online version and have no 2019 1099-R to file, you will have to prepare the 5329 manually .

Download the 5329 form from the IRS website and fill it out the same as above. Print and mail your return with the 5329 form and explanation attached as described in the 5329 instructions.

The 2019 5329 must be attached to your printed and mailed 2019 tax return and cannot be e-filed.

[NOTE: You can only use this method if you are requesting a waver of the penalty and there is no taxable amount on the 5329 form line 55 that must be transferred to the 1040 form]

From 5329 instructions:
Quote:
"Waiver of tax. 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 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. "

Download blank 2019 5329 form here:
Form: http://www.irs.gov/pub/irs-pdf/f5329.pdf
Instructions: http://www.irs.gov/pub/irs-pdf/i5329.pdf