Advisor Insights

Tricky Timelines If You Miss an RMD

Natalie Choate

When a client fails to take a required minimum distribution, you usually want to seek a waiver of the 50% penalty that would apply to this mistake. My October 2015 column explained exactly how to apply for a waiver of this so-called excess accumulations tax, using IRS Form 5329. But for what year or years do you file that form? Do you have to file it for every year that has passed since the RMD was missed?

The usual rule is that the form is filed for the "distribution year" of the missed RMD--and that year only--but there are two exceptions to the general rule. These examples illustrate the variations.