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IRA RMD Reporting

So we’ve talked about how to determine your Required Minimum Distributions (RMD) from your IRA and when you must take it… how does the IRS know that you’ve done what you’re supposed to?  As you might expect, the IRS doesn’t leave such things to chance.

1099rAny time you receive a distribution from an IRA, a form 1099-R is generated.  If this is for your RMD for the year (treated as a normal distribution) there will be a Code of 7 in Box 7 of the form.  This will be true of any amount that you receive from your IRA in a “normal” distribution.  The amount of the distribution will be found in Box 1 of the form, and the taxable amount will be in Box 2.

5498In addition, a form 5498 will be generated for your IRA and sent to you by January 31 of the following year – meaning, if you receive a 5498 before January 31 of the current year, it is relating to an IRA balance as of December 31 of the prior year.  This statement will either detail the amount of your RMD (based on your age, the standard table, and the balance in the IRA as of 12/31) or may include an offer to calculate the RMD amount if you request.

Both of these forms are filed with the IRS, so that they’ll know if you’ve made the appropriate distributions from your plan(s).

IRA Owner's ManualClick the link to pick up a copy of An IRA Owner's Manual or if you'd prefer the Kindle version (and let's face it, ALL the cool kids do!), you can find that at this Kindle version link.

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