Advanced Underwriting Consultants

Ask the Experts – March 28

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: If an individual failed to take an RMD in 2013, does she have to take two RMDs in 2014 (one for 2014 and one for 2013)?

Answer: Generally, no unless the individual is attempting to have the penalty waived.

If an individual fails to withdraw any portion of an RMD, the amount not withdrawn is taxed at 50%. The IRS may waive the penalty if the account owner shows that the failure to take the RMD was due to reasonable error and that the RMD was taken, even though it was late.

If the individual fails to take the RMD in 2013 and the 50% penalty is imposed, the missed RMD does not have to be taken later. The 2013 RMD would still be in the account, and the 2014 RMD would be calculated including the extra in the account because the 2013 RMD was not taken.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.