RMD information was not provided

[Jakyasar]

Hi

Just took over a db plan with 9/30 year end.

For the 9/30/18 year end, the participant (owner's spouse and 75 years old) was 20% vested with a very small AB. Prior TPA did not alert them of the RMD requirements for 2018 and also for 2019.

The amounts are very small possibly between a total of $100 to $500 range for each year, may be a bit more for 2019 - did not do the math yet.

What is the recommended course of action, send a letter to the IRS and say sorry and forgive me?

Is there a threshold on the minimum 50% penalty?

Thank you

[C. B. Zeller]

1 hour ago, Jakyasar said:

send a letter to the IRS and say sorry and forgive me?

Depends. Does the letter say "Form 14568" at the top and have a VCP user fee tucked inside?

https://www.irs.gov/retirement-plans/correcting-required-minimum-distribution-failures

You can also try your luck with requesting a waiver on Form 5329. They might grant it, they might not. See the instructions for "Waiver of tax for reasonable cause" here https://www.irs.gov/pub/irs-pdf/i5329.pdf

[Jakyasar]

Is my prior TPA forgot to tell me 2 years in a row a reasonable cause - rhetorical question.

As the amounts are so minimal, I will discuss with the client and what they want to do.

Thank you

[Jakyasar]

A follow up question.

Now that I have to provide  options for RMD that was not provided/calculated, I can only use the AE options available for the initial year of the RMD, correct? The reason I want to check is that I am adding additional options now for the upcoming RMD for the owner nd they can not be available retroactively to the spouse?