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I have a small inherited traditional IRA. I neglected to…

Thank you. I...

Thank you. I have a small inherited traditional IRA. I neglected to take the required distribution of $211 before the December 31, 2016 deadline, but have received it already. How should I handle this?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

The IRA belonged to my mother. It is with Merrill Lynch. The total amount of the inherited IRA is $2,324. I took a distribution in 2015 in the amount of $211. I took a distribution this month in the amount of $211.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I think that's it.

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4/17/2017
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 16,645
Experience: 15years with H & R Block. Divisional leader, Instructor
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Customer reply replied 10 months ago
Thank you.

To have the 50% penalty waived by the IRS you must correct your error. That means taking the RMD amount that was not taken in 2016. As you have done that do not forget to take one for 2017 too.

File the 2016 IRS Form 5329. When you file this form, you do not have to prepay the penalty, but if the form is filed without payment of the 50% penalty and IRS determines that the penalty is owed, you could owe interest on the penalty payment. Form 5329 must be filed to start the statute of limitations clock.

Attach a letter of explanation to Form 5329. The letter should include why the 2016 RMD was missed, the fact that it has now been taken, and that you have taken steps to be sure that future RMDs will be taken as required.

I hope this is useful

Please rate in a positive way (look for the STARS ) so I am credited with responding.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience: 15years with H & R Block. Divisional leader, Instructor
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Customer reply replied 10 months ago
In which section of the form 5329 do I provide the info. None seem to apply to my situation.

Part IX is where you list that

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Robin D.
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