Late RMD

[doombuggy]

OK a plan that we just acquired called me on Monday to tell me that 2 RMDs should have been done in 2013 and was not. Why didn't I catch this? This was a recent acquisition to our TPa firm, and we rec'd a copy of the 410b and ASC 401k report (asset data only, no census or plan specs). These 2 participants were not on the proposal data we rec'd since they no longer work there. It also turns out that they have died (not recently, in 2010 and 2011).

So we need to get these issued right away, but what else do we need to do to "correct?"

Apparently 4 of the siblings are the benes. These two were owners as some point in the past. I have done many RMDs since 1995, but I don't ever recall doing one for a bene, let alone 4. Do we calc the RMD on the dec'd's age then divvy it up, or on the age of the youngest bene? I am still waiting on a copy of each beneficiary form for the dec'd participants.

I forgot to ask this at the ERPA Workshop and APC that SunGard had here in Orlando this week (and I went to). So I am turning to y'all for help!

[ESOP Guy]

You use the oldest beneficiary's age not the youngest. It has been years since I have done one but I do recall clearly it is the oldest not youngest. Also, there is no recalculation of age with non-spouse beneficary.

[doombuggy]

Are there any penalties for having the 2013 RMD issued in 2014?

[Lou S.]

Are there any penalties for having the 2013 RMD issued in 2014?

50% excise tax on the participant but may be waived for cause by IRS.

Plan is supposed to correct through VCP if I recall correctly.

[Tom Poje]

I'm not 100% sure on the VCP issue.

I had found the following a few years ago, and used it for an ASPPA presentation.

•You can’t ask for the penalty to be waived until you have actually taken the distribution. This is proof you are trying to fix the situation as soon as possible.

•Fill out form 5329.

•Write letter begging for mercy, explaining the reason you didn’t receive the minimum distribution was the incompetence of the investment house or something similar.

•Years ago, it was required to send in the 50% penalty and hope the IRS would have leniency and waive the penalty and return the money. Now simply send in the letter with the Form 5329, and if they don’t accept your lame excuse they will bill you.

...................

Appendix A .06 of EPCRS indicates to make the distribution (plus earnings). there is no mention it has to be VCP

....................

and when you say "Why didn't I catch this?" or rather, it is not really my fault, well I accompanied this particular issue with the following:

It's not my job to run the train.
The whistle I don't blow.
It's not my job to say how far,
the trains supposed to go.
I'm not allowed to pull the brake,
or even ring the bell.
But let the damn thing leave the track,
And see who catches hell!

[doombuggy]

So I am filling out the 5329 (still waiting on data for the RMDs but want to get ahead) and it asked for the name of the individual subject to additional tax. Since there are 4 benes for each of the 2 dec'd participants, does that mean I have to fill out 8 of these forms?

[doombuggy]

it won't let me edit my last post as I forgot to ask:

Where it says paid preparer, I assume that I am putting my info in there, along with my PTIN?

[Belgarath]

Tom - it occurs to me there's a song there for you to perform. Add a chorus, and use the tune of Merry Wanderer.

It's not my job to run the train.
The whistle I don't blow.
It's not my job to say how far,
the train’s supposed to go.

Chorus:

It wasn’t me.

Use SCP.

Audit Cap.

It was you so please just shut your trap

You see.

It wasn’t me.

Please pay me quoted fee.

I'm not allowed to pull the brake,
or even ring the bell.
But let the damn thing leave the track,
And see who catches hell!

Chorus:

It wasn’t me.

Use SCP.

Audit Cap.

It was you so please just shut your trap

You see.

It wasn’t me.

Please pay me quoted fee.

[masteff]

1) To edit a new post, I've found you have to exit the thread and then reenter it, such as by clicking "new content" and the clicking the thread. Not sure why.

2) One 5329 per beneficiary showing the combined amount.

3) Yes, you're the paid preparer.

But that begs a question: Do the beneficiaries have anything else from other sources that needs to be reported on form 5329? If so, then I'd provide the information "pro forma" only and let them complete their own 5329.

Keep in mind that 5329 can only be filed by itself if the taxpayer is not otherwise required to file. If they have to file, then 5329 must be attached to 1040 (or 1040X if its for a prior year).

[Tom Poje]

Belgarath

love it. I didn't even envision a song. very cute. hadn't thought about the melody for years

I still think the poem's message is so appropriate to this business. It's not my fault but I get the blame.

Doombuggy - good luck!

[Belgarath]

From the very first time you posted it, I've always referred to it as the TPA Theme Song. It captures the essence of the TPA experience.