Took normal rather than required minimum distribution

Forum|Forum|3 years ago
January 24, 2023
1 reply
1 view

Tried to take RMD several minutes after markets closed on Thursday, December 29, 2022 and was told by custodian that it was too late to take my 2022 RMD. Instead, I took a normal distribution effective on December 30 in the same amount as my RMD. Will I receive a 1099-R for this normal distribution?

In summary, I took a normal distribution for the entire RMD amount in 2022, but it was not officially an RMD. How do I report this on my 2022 taxes?

Thanks for your advice.

dmertz

Level 15

What the custodian probably meant is either it was too late to make the distribution on December 29th but would instead be processed on December 30th, or that the distribution request would not be processed until January 2nd or 3rd. Regardless, the distribution you received is still officially your 2022 RMD, although it might be a late-taken RMD. (RMDs are normal distributions, they are just ineligible for rollover and distributions are RMD until your RMD has been satisfied.)

If the distribution was processed in 2022 and appears on a 2022 Form 1099-R, report it as usual.

If the distribution was instead processed in 2023 and will be reported on a 2023 Form 1099-R, whether or not you must file Form 5329 to request a waiver of the excess accumulation penalty depends on whether or not 2022 was the first year for which you were required to take an RMD. If so, no Form 5329 is needed. Tell TurboTax you were not required to take this RMD in 2022. If you were first required to take an RMD for 2021 or earlier, your 2022 tax return needs to include Form 5329 to request the waiver of the penalty. The distribution made in 2023 will be taxable on your 2023 tax return along with your 2023 RMD..

RMDmissed2022Author

Level 2

Thanks for the prompt response. To further clarify:

On Thursday, December 29, (just after 4:00 PM) I was told it was too late to take a 2022 RMD from my account, but I could and did take a 2022 normal distribution in the exact RMD amount. That distribution was effective the next day on December 30. I have not received a 1099-R for this distribution and checking the account website, I see no indication that one is coming.

Are firms required to send a 1099-R for all distributions or just for RMDs?

Whether or not I receive a 1099-R, can I file as having taken my 2022 RMD, or do I need to take additional actions?

Thanks for your further assistance

DianeW777

Level 15

Yes, you can file the distribution on your 2022 tax return. All distributions must be reported on Form 1099-R from any retirement account, IRA or Roth IRA, and all other types. First be sure to check with your financial institution to inquiry about your form. Since you took distribution in December, they would be required to issue the form for 2022.

They still have some time before they are required to release and/or issue the forms to their recipients. Keep your records for distribution dates and amounts with your tax file. As indicated by @dmertz, you may need to read the agreement to see whether the distribution is technically allowed to be applied to 2023 based on the date issued so close to the end of the year.

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