I did not withdraw my IRA set amount on time when I reached 70.5 years of age, was distracted with heart health issues, but did withdraw the proper amount about June 22nd on realizing I had not withdrawn the amount previously! I am mailing in form #5329, and I understand that there is often a waiver of the 50% penalty fee first time around. How should I file the #5329 form? Should I include a note stating my case as I have here?
I have the form #5329 and have talked to a tax consultant about this! He suggested I contact the IRS.
You should file the return normally without the 5320, but with a separate page attached to the back with an explanation of your circumstances.
You should NOT call the IRS first. They cannot handle "what ifs". They cannot mark your account. They cannot do anything until you file the return first.
(That should be 5329 on the first line)
If they assess a penalty later on a separate notice, you will again need to state your circumstances and request a penalty abatement.
Do not be upset about any letter from the IRS. In most cases, with reasonable cause (health issues qualify as reasonable) the IRS will waive the penalty, also seeing that you rectified the situation in a reasonable time.
Does that mean I fill out the form as is and include the note I mentioned?
The form I have is #5329. That is the one I send?
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As I stated in my original reply, DO NOT send Form 5329 unless you want the penalty to actually apply to you.
Then I send nothing until I get a notice from them? Pardon me. I saw that you were off line and I thought the session had ended before I understood what I should do now.
David: My advice is to prepare a tax return without a penalty, however, add a note attached to the return explaining that you did correct the RMD situation. IF, and ONLY IF they send you a letter with a penalty, do you need to do anything else.
Thanks and have a good day, sir.
Over 20 Years experience in resolving tough tax cases