LJMetzger[at]aol.com (Lewis Metzger) wrote:
- quote -

Thank you all very much for your help!

Wayne

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wamates[at]aol.com (W A Mates) wrote:

- quote -

From anecdotal evidence, the IRS seems to be aware of this
problem. Your mother is not alone. I would fill out Form
5329, Part VIII which indicates the 50% penalty and NOT
REMIT THE PENALTY.

Attach a letter to the tax return requesting PENALTY WAIVER,
indicating that the distribution was not made due to error
or omission on your part, and that corrective action is
being taken (i.e. the $8450 PLUS 2004 MRD is being taken in
2004).

Lewis

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wamates[at]aol.com (W A Mates) writes:

- quote -

1. Find a new tax attorney, if you ever need one. (You
don't need one here.)

2. See the discussion of excess accumulations in IRS
Publication 590 for how to handle this on the 2003 return.

3. See whether the custodian has a method of automatically
distributing the required minimum distribution each year.

Phil Marti
Topeka, KS

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wamates[at]aol.com (W=A0A=A0Mates) posted:

- quote -

I hope there was a little misunderstanding. I _hope_ the
tax attorney was advising your brother that your mother was
*required* to take a minimum distribution in 2003.

- quote -

Pub 17 (Page 132) clearly states traditional IRAs eventually
"_must_ be distributed. If there are no distributions ...
you may have to pay a 50% excise tax on the amount not
distributed as required." [Yes, that is *fifty percent*]
The subject is also covered extensively in Pub 590.

There is a method to seek redress for the error of missing a
RMD. It is covered on Page 134 of Pub 17, and involves
filing a Form 5329 with your mother's Form 1040.

I would recommend at this late date, you should seek
professional aid, to make sure this is handled properly and
enhance the probability that the IRS will "forgive" the
mistake and refund the "excess accumulations tax" -- which
you will have to pay at the time of filing.

Consider an Enrolled Agent (EA) or CPA who specializes in
tax filing.

Good luck.

Bill

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"W A Mates" <wamates[at]aol.com> wrote:

- quote -

The only thing that should be declared on her 2003 return is
a penalty tax of 50% of the amount that should have been,
but was not taken. You can then ask the IRS to refund that
penalty tax, which I believe they would do, under the
circumstances. When you apply for the refund, you would
point out that as soon as you (she) became aware of the
mistake, steps were taken (the $10k withdrawal) to correct
the error.

Make sure you properly compute the 2004 minimum distribution
and withdraw that amount before the end of the year, taking
into account that you have already withdrawn $1,550 ($10K
less $8,450) of the 2004 minimum distribution.

Barry Picker, CPA/PFS, CFP

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My mother, who is 78 and can be forgetful, was required to
take a minimum distribution of $8450 for tax year 2003. She
forgot and instead took $10,000 on 2/26 of this year for
which she will receive a 1099R.

A tax attorney has informed my brother that she must declare
some amount as her IRA distribution for 2003. I believe this
is wrong since she has no 1099R for 2003 and will already
receive a 1099R for 2004 for 10K.

How do I handle this on her tax return? Thank you.

Wayne

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