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Level 1

What actions must I take if my broker made an error and took too small of a RMD from my IRA?

When I worked with my broker to take my RMD they made an error and processed too small of an RMD by $2,850. I have a letter from the broker acknowledging this fact. The added the $ 2,850 on January 31, 2019. Do I report the correct amount for 2018 taxes? Are there other forms I need to complete? Can I get a waiver of the additional excise tax that would normally be charged? If so, what is the process?

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Accepted Solutions
Level 7

What actions must I take if my broker made an error and took too small of a RMD from my IRA?

You will report only what was taken for 2018.

You will take the RMD by 4-1-2019 which you did.

Then you will ask for a wavier of the penalty on the tax return for not taking the RMD.

You have received form 1099-R for some IRA RMD, please enter the form information and go through the questions. 

You will be asked if you have met RMD requirements, what is the required amount and actual amount received.

If not all is taken, Turbo Tax will ask to type in explanation where you can show the reasonable error and what steps were taken to fix it.

TurboTax will generate a Form 5329 that will be attached to the return.

IRS often allows a waiver of the penalty if reasonable steps are taken to fix it (which you did) and it was a broker error.


1 Reply
Level 7

What actions must I take if my broker made an error and took too small of a RMD from my IRA?

You will report only what was taken for 2018.

You will take the RMD by 4-1-2019 which you did.

Then you will ask for a wavier of the penalty on the tax return for not taking the RMD.

You have received form 1099-R for some IRA RMD, please enter the form information and go through the questions. 

You will be asked if you have met RMD requirements, what is the required amount and actual amount received.

If not all is taken, Turbo Tax will ask to type in explanation where you can show the reasonable error and what steps were taken to fix it.

TurboTax will generate a Form 5329 that will be attached to the return.

IRS often allows a waiver of the penalty if reasonable steps are taken to fix it (which you did) and it was a broker error.