Failure to take RMDs

[rlennon]

I have a new client who set up RMDs.  I asked for TY 2019.  She had not received one from the Fund for TY 2019 nor for TY2018.  She had asked for the check to be sent to her address.  The company did not tell her they did no operate that way, they only did direct deposit.

I had her ask the company to cut 2 checks, one for TY 2018 RMD amt, and one for TY 2019 RMD.  This was in late April 2020.

Is there a way I can back date the RMD for those tax years,  or should I just submit it for TY 2020?

Thanks

[Just-Lisa-Now- · Accepted solution]

They will be income in 2020.  You should fill out the waiver request at the bottom of the 5329 for the 2019 penalty that should be due for failure to take the RMD.

[IRonMaN]

"The company did not tell her they did no operate that way"

Either you aren't getting the whole story, or it is also time to do a rollover to a new investment company.

[George4Tacks]

Also file a 5329 for 2018 with the waiver request. This can be mailed as a stand alone form. 

Do a corrective distribution for the two years in 2020. The 2020 distribution can be waived. Depending on the age of the client, you might encourage them to set up an automatic distribution each year.  If they won't do that either, seriously consider a roll over to an institution that appreciates the client more.

[BobKamman]

Ever wonder why some people say they “cut” checks? Whatever happened to writing checks, or printing checks, or sending checks? And then why do some people refer to cutting checks when what they obviously mean is direct deposits? Anyway, the client is clearly confused and I would ask if she has a family member who can help her with financial matters, including following up on whether this money eventually reaches her. I wouldn’t ask for separate deposits of the 2018 and 2019 amounts, I would just combine them into one.

Filing a Form 5329 for 2018? I feel sorry for the people at IRS who risk their lives to process something like that. The Washington Post has a long article this morning about IRS that everyone here should read – here’s the link, it might be behind a paywall.

https://tinyurl.com/y7xnjb4x

“The Internal Revenue Service had barely begun bringing its lowest-paid workers back to the office in late April when someone in the Philadelphia call center came down with a fever, forcing the third-floor staff to head home. Within two days, an employee in the processing center in Kansas City, Mo., who routes paper checks for deposit was sick with coronavirus symptoms, too. Then the husband of a woman in accounts management in the Covington, Ky., office tested positive, leading managers to presume that she was infected. The three service centers, among 10 campuses nationwide where the IRS is trying to reinstate 11,000 employees, had to partially close for a week for deep cleaning.”