Missed RMD...

[K-t-F]

I was asked.... if a client missed a RMD back in 2005 and the 50% penalty tax was paid.... does he still have to take the 2005 RMD in 2006 in addition to the 2006 RMD? it was suggested to me that... "hey, he missed it, he paid the penalty so the only RMD needed to be withdrawn in 2006 would be the 2006 RMD.

Thoughts?

Thanks

[K-t-F]

Anyone?

[Michael Devault]

It's my understanding that if the penalty is paid, you don't have to take the distribution, too.

Keep in mind that the IRS may return the amount paid for the penalty if the RMD wasn't taken because of an error and steps are being taken to rectify that error. In this situation, the RMD would obviously have to be taken, and the penalty paid, in the hope that the IRS would forgive the error and return the penalty payment.

I hope this is of some benefit.

[K-t-F]

Can you point me to anything that would verify your statement? Something to hang a hat on?

Thanks, appreciate it.

[Guest Bill M]

Here is the last sentence of Reg § 1.402(c )-2 Q&A-7(a)

If the total section 401(a)(9) required minimum distribution for a calendar year is not distributed in that calendar year (e.g., when the distribution for the calendar year in which the employee reaches age 701/2 is made on the following April 1), the amount that was required but not distributed is added to the amount required to be distributed for the next calendar year in determining the portion of any distribution in the next calendar year that is a required minimum distribution.

[Belgarath]

You might want to take a look at Revenue Procedure 2006-27, Appendix A, .06, which I think exactly addresses your situation.