Missed RMD

[Yardley CPA]

Client did not take RMD in 2014.  I instructed her to call her bank a she has done that.  Bank will distribute amount to her within the next few weeks.  Amount of RMD was $2,078.  I want to make sure I am completing the 5329 correctly:

 

Line 50:     $2,078

Line 51               0

Line 52      $1,039  I will also provide explanation in the box provided for this line.  

Line 53      $   520

 

 

All who feel I've completed this correctly, kindly raise your hands!  

 

[jklcpa]

Line 52 - "subtract line 51 from line 50"

Line 53 - 50% of line 52

 

 

Why not request a waiver?  Is this the first year's distribution?  Or is this a first time offender and every other year has been had RMDs received timely?

Requesting the waiver requires that you provide a reasonable explanation for the error and describe the steps that your client has taken to remedy the situation and also so that it won't happen again.

[Yardley CPA]

Thank you, Judy.   I planned on completing line 52 and seeking the waiver with the explanation box you bounce out to.  I was under the impression that is the proper way to do it.  I did that last year and it worked with another client.  

 

Last year, I completed the 5329 in a similar fashion as I stated in my opening comments above.  I may have completed it incorrectly.  But when you bounce out on Line 52 it takes you to a box to include an explanation.  I did that and explained the circumstances and ultimately the tax was waived.  On that bounced out page is a line asking for "Amount of shortfall that the waiver is being requested on."  

 

 

I guess for this instance I should input the total amount of $2,078 on the line "Amount of shortfall that the waiver is being requested on??  

[Yardley CPA]

I found some additional information.  Line 52 should be zero according to this:

 

Make sure to properly fill out form 5329. File a separate form for each year.

• On line 50, enter the amount of the RMD that you’re required to take.
• On line 51, enter the total distributions that you actually took during that year.
• On line 52, enter “zero” (VERY IMPORTANT) and write “RC” (reasonable cause) and the amount you want waived in parentheses on the dotted line next to line 52. DO NOT ENTER THE AMOUNT OF THE SHORTFALL!

[jklcpa]

 

I found some additional information.  Line 52 should be zero according to this:

 

Make sure to properly fill out form 5329. File a separate form for each year.

• On line 50, enter the amount of the RMD that you’re required to take.
• On line 51, enter the total distributions that you actually took during that year.
• On line 52, enter “zero” (VERY IMPORTANT) and write “RC” (reasonable cause) and the amount you want waived in parentheses on the dotted line next to line 52. DO NOT ENTER THE AMOUNT OF THE SHORTFALL!

 

 

 

Well, yes!  I agree with that, but in your original post you did not indicate that you were requesting a waiver and that is the reason my post was worded as such.

 

If you don't request the waiver then the shortfall is the full amount and the penalty is 50% of that.  If you are requesting a waiver, follow the above.   Whichever you choose, your original post of your input was incorrect.