RMD

[fredazcpa]

Client is telling me that their IRA trustee (who is an administrator for self-directed plans) because she missed the Date (April 1, 2015) that she should report an "In Kind" distribution. 

 

 

Any one ever heard of an In Kind from an IRA, the only think I can think of as In Kind is stock issued, or the investment changed to the persons name.

 

thank you

[jklcpa]

Well, that is exactly what in-kind means for an IRA distribution also. The FMV of the assets distributed in-kind should have still been made prior to the 4/1 deadline, so I don't know how taking in-kind vs cash will remedy that.  Maybe she was told that because the IRA is illiquid and unless some investment is sold, there is no way to make a distribution now without selling and waiting for cash to be raised. 

[fredazcpa]

Should the trustee have sent a 1099R?

[jklcpa]

It will be reported in the year the distribution actually takes place, in your client's case it is 2015, so she won't receive a 1099R until sometime early next year.  I guess I don't understand why the trustee thinks that the in-kind distribution can be made retroactively to remedy missing the 4/1 deadline.  I'm assuming that last year was the year your client turned 70 1/2 and she was using that period up until April 1st of 2015 to take the distribution that relates to 2014. If that is the case, please remember that she also must also take a distribution for 2015 before the end of this year.

[fredazcpa]

It will be reported in the year the distribution actually takes place, in your client's case it is 2015, so she won't receive a 1099R until sometime early next year.  I guess I don't understand why the trustee thinks that the in-kind distribution can be made retroactively to remedy missing the 4/1 deadline.  I'm assuming that last year was the year your client turned 70 1/2 and she was using that period up until April 1st of 2015 to take the distribution that relates to 2014. If that is the case, please remember that she also must also take a distribution for 2015 before the end of this year

Yes her 70 1/2 was Sept 2014, which she had until yesterday

without a 1099R nothing can be done and she will need to make the two this year (2015) or if no distribution, 1099R she pays the penalty

thank you for your help

[JohnH]

Hope she's not invested on one of those weird self-directed IRA's that someone I know got suckered into.  The trustee started talking about "in kind" distributions and a bunch of other nonsense to cover up the fact that his firm had (inadvertently) participated in a theft of her assets.  Some people are being indicted over this one.

Edited April 2, 2015 by JohnH