Missed rmd and higher taxable income in year of distribution
Situation – RMD was missed in the current year 2019, was not the first RMD but was subsequently remedied in first 9 days of the next year (2020). understand the process to waive the 50% penalty, but is there any way to include RMD in current year or meet with IRS as the RMD was quiet large ($160K) and will cause a larger than normal tax amount due in 2020 due to higher marginal rate despite missing date by 9 days. Any options? thanks
Permalink Submitted by Alan - IRA critic on Fri, 2020-01-10 18:30
While the IRS will waive the penalty, they are not likely to allow you to report the income in the year it should have been distributed. I haven’t heard of that happening, and this is a major pitfall to missing RMDs. Some people miss several years, and if they make up the late RMDs, the taxable income is going to be much higher in the year the RMDs are made up. Of course, no harm in asking but I would not expect the IRS to relent.
Permalink Submitted by john yeldezian on Fri, 2020-01-10 19:09
Thanks, that is what I expected, big impact for a few days….IRS was not very helpful, suggested making larger donations……
Permalink Submitted by Alan - IRA critic on Fri, 2020-01-10 20:50
Of course, you could do a QCD, but that costs you 10k for every 3k of tax savings.