RMD

[imjulier]

Hi there-

Anyone know if the IRS can identify when an RMD was not taken other than self-reporting? Have a non-client (friend) who is thinking about just not reporting that they didn't take the RMD because the penalty is so high (50% according to her but I've never looked into it). I would never prepare someone's tax return that way once I knew what happened but she on her own of course can choose any action she wishes. Thanks for any info.

Julie

[chuck]

Hi there-

Anyone know if the IRS can identify when an RMD was not taken other than self-reporting? Have a non-client (friend) who is thinking about just not reporting that they didn't take the RMD because the penalty is so high (50% according to her but I've never looked into it). I would never prepare someone's tax return that way once I knew what happened but she on her own of course can choose any action she wishes. Thanks for any info.

Julie

Penalty is 50%. Had a client that forgot once. Filed paid the 50% and then requested a waiver of it and it was granted.

[grandmabee]

there is that form 5498? that the payer has to report every year to the IRS so there could be a matching program.

I too have had a couple penalies abated. We paid first then asked for refund back. it took about 8 months to get back. You do have to pay the taxes on the interest earned but that is problably not much

and they must take out the money that was supposed to be out so infact this year they will have a double disturbtion

[cpabsd]

The tax bill that was signed on 12/17/10 had a unique part to it that might help your client. If they do a trustee to charity transfer, they can still take the RMD for 2010 during January 2011. Of course, this only applies if taxpayer is over age 70 1/2. This helped my mom who forgot to take her RMD in 2010.