RMD not taken one year, does it affect next year's?

[BG5150]

A person's 2007 RMS is based on her 12/31/2006 account balance. For argument's sake, let's say the RMD is $1,000. She never takes it.

When I calculate the 2008 RMD using the 12/31/2007 balance, I don't reduce the balance by$1,000 because of the previous year's RMD do I?

(Did it used to be done like that?)

[Guest Sieve]

Yes, you do determine the following year's MRD by reducing the appropriate balance by the amount of the MRD not taken. Look at Appendix A, .06, of the new EPCRS - Rev. Proc. 2008-50. (Of course, you could do it the way you suggest--it would require a larger MRD in the following years, and therefore would be more costly to correct, but I don't suspect that the IRS would have any trouble with that approach.)

By the way -- I hope you plan to correct the missed MRD under EPCRS.