5329 TAKEN IN JANUARY OF 2021 AND 2022

[lburdickandassociates]

So I helped a client take her RMDs in Jan of 2023 for both 21, and 22.   It was a substantial amount...

Neither return had been filed. She requested an extension and I am preparing both years now.  Can I just add the form 5329 to each year, list amounts taken late?

She still has not taken her RMD for 2023 so I am trying to assist her to get that ball rolling also. Shes in her 80's and her memory not the best.

Any thoughts?

[abctax55 · Accepted solution]

You report the distribution(s) in the year TAKEN (distributed/received), not in the year they *should* have been taken.

Your client will have three years' worth of RMD's to report in 2023. 

As you are preparing 2021, and 2022 now, complete the part of F 5329 for each year that asks for the waiver of the penalty.  Explain, verbosely, everything your client has done & is doing going forward to make sure future RMD's aren't missed.  

Don't compute the penalty or have your client pay it now; the IRS (in the past...) has been very forgiving on these.

[lburdickandassociates]

wow that will really be awful for 2023 then.  SO you say to not calculate, or list the additional taxes owed.  Just fill out waiver indicating what steps have been taken to correct this issue and what ones are in place to avoid this issue in the future?

The letters this client may receive may send her over the deep end.....  Okay I got it filled out and entered the statements.  Hopefully they realize she's 80, doesn't drive, and now we not only can communicate with financial advisor we set up these distributions to occur each year at same time with taxes withheld.  Hopefully that will prevent this issue in the future.  Thanks for your feedback and information....

[abctax55]

"... not calculate, or list the additional taxes owed"

Don't calculate, or pay the penalty.  It's much easier to have them forgive it, than it is to pay it & find someone to write a refund check.  Again, in the past the IRA has been 'very' lenient.

The *additional tax* is on the 2023 return, when the distribution is actually received.  If that means more tax/higher bracket, it's irrelevant.