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Forget your RMD? Here’s What to Do

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If you have an IRA that you have to take Required Minimum Distributions (RMDs) from, you need to do this every year by the end of the year.  So what if you forget one year?

The rule is that if you don’t take your RMD by the end of the year, you could be subject to a penalty of 25% of the amount of the RMD. If you’ve realized your error before the IRS has notified you, there are a few things you can do to try to resolve the situation. There may even be a way to resolve it even though the IRS has caught on, as well.

The very first thing you should do is immediately withdraw the RMD in the amount that you should have in the previous year. Contact your IRA custodian and request the distribution as soon as possible. It is recommended that you take this as a separate distribution, in exactly the amount prescribed (more on this later).

Then, if you’ve already filed your tax return for the previous year, fill out out Form 5329 for that specific year.  If you haven’t filed yet, go ahead and file the Form 5329 with your regular Form 1040 return. To find the old forms, to the the and search for the year you need (

Form 5329 is the form that you use to report additional taxes on your IRA accounts – in this case you’re reporting the fact that you “overaccumulated” by not taking your appropriate RMD. You’re concerned with section IX on the form (Additional Tax on Excess Accumulation…). Fill out line 52 with the amount of the distribution you should have taken, and put zeros in 53-55. On the dotted line next to line 54 (the subtraction line), place the following – RC ($1,000) – this is if the distribution was $1,000. Update with your actual figure. (Note: I used the form from 2021, the form you use might have different line numbers.)

The RC notation indicates that you believe you missed this distribution due to a reasonable cause. A reasonable cause is generally something outside of your control, such as your custodian did not indicate to you that a distribution was necessary. Other reasonable causes could include a health issue or death of your spouse, for example. Simply forgetting is generally not a reasonable cause, but if you have some plausible explanation, give it a shot. If the IRS disagrees, they’ll send you a bill for 25% of the amount of the RMD.

Include a letter with the return, asking for a waiver of the penalty, explaining why you missed the RMD (your reasonable cause), and that as soon as you realized it you corrected your error by taking the distribution. The IRS may let you off the hook – it’s easier for them to do this for taxpayers than to hunt you down and send you a bill.

It’s not fool-proof, but it’s the best chance that you have at this stage. And then figure out a way so that you don’t get into this position again in the future. For example, set up an automatic distribution plan by having an adequate amount sent to you monthly or quarterly.  Make sure that you adjust this annually to match that year’s RMD. This way maybe you won’t have this problem next time around.

If you simply forgot and don’t have a reasonable cause for the omission, fill out Form 5329 as the instructions explain, indicating the amount you owe in additional tax, and send that amount along with your signed form.

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