Form 5329
REQUESTING A WAIVER OF TAX Requesting a waiver of the 50% tax is done by completing IRS Form 5329, and IRA owners must use the version of the form that was issued for the year the RMD was missed. For example, if the RMD error occurred in 2018, the 2018 version of Form 5329 must be filed.
Can I redeposit my 2020 RMD?
But some people took out an RMD in early 2020 before the waiver was enacted in late March. Those people had until the later of August 31, 2020, or 60 days after the payout to put the money back into the account and treat the distribution and subsequent redeposit as a tax-free rollover.
How to file a 5329 form for a missed RMD?
You will need to file a 5329 form and request a waiver of the penalty. (The waiver would only be denied if there is no reasonable explanation and the missed RMD was not taken at all.) Unfortunately this can only be done using the “forms” mode that is only available with the desktop software if you do not have a 1099-R to file.
Is there a way to recover a penalty on form 5329?
The IRS almost NEVER denies the waiver but recovering the paid penalty is not easy. Any tax due on the RMD is paid in the year that the RMD is actually taken, not with the 5329. First, if you have not taken the missed RMD, take it ASAP so you can tell the IRS in the explanation statement that it has been taken.
How to file for a RMD waiver interview?
You will need to file a 5329 form and request a waiver of the penalty that would only be denied it you intentionally ignored the RMD or failed to take in prior to filing the 5329. If you do have a 2016 1099-R to report then the RMD question in the interview will go to the form 5329 waiver interview if you say that the 2016 RMD was not taken.
When to file Form 5329 for the prior year?
If you don’t have any other changes and haven’t previously filed a federal income tax return for the prior year, file the prior year’s version of Form 5329 by itself (discussed earlier). If you have other changes, file Form 5329 for the prior year with Form 1040-X, Amended U.S. Individual Income Tax Return.
