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Question: Is it too late for a client to take a required minimum distribution for 2011 from her traditional IRA?

Answer: If the client turned 70 ½ in calendar year 2011, she had until April 1, 2012 to take her RMD.

If the client turned 70 ½ in a year prior to 2011, she was required to take the distribution by the end of 2011.

If a taxpayer fails to take an RMD by the deadline, the IRS imposes a special penalty tax of 50% on the amount that should have been distributed.  The penalty tax may be waived if

• the taxpayer convinces the IRS that the failure to take the RMD was due to reasonable error, and

• that reasonable steps are being taken to fix the problem.

A taxpayer applying for relief from the penalty tax must file IRS Form 5329 and attach a letter of explanation. See the instructions to Form 5329 for all the rules on how to apply for this waiver.

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