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Old 10-31-2017, 03:29 PM   #41
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Originally Posted by Rosedala View Post
This is good advice, but since I'm withdrawing the 2017 RMD from another (more normal) institution, I don't expect to have any problem. I figure I don't have to explain anything to this (normal) institution, right? Just requesting them to send me the check as soon as possible and I'll follow it up as closely as I can to get it soon. I'm making the calculations now and will send my request tomorrow morning. Am I correct?

Actually the institution that did this error can't do anything until I'm done with taxes, etc. they told me.
I wonder why they can't do anything until you are done with your taxes. What does your taxes being done have to do with them? And what are they saying they will do, once your taxes are done?
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Old 10-31-2017, 03:33 PM   #42
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Originally Posted by Travelfreek View Post
This is why we take RMDs in January of each year! Since my mother in law didn't maximize taking RMDs while in a ridiculously low tax bracket, my husband inherited her IRA and it was then taxable to him. Think about that aspect as you take your RMDs (take larger distributions if it doesn't affect your tax bracket).
Good advice!
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Old 10-31-2017, 03:47 PM   #43
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I missed withdrawing an RMD from a BDA account a couple years back. I actually forgot about it, and put the order in during December, but Fido was all closed up till after the 1st, and the RMD processed a few days later. Learned the lesson to make a checklist of this stuff and pull that RMD earlier in the year.

I use Turbotax, and if I remember correctly, I answered 'No I did not pull an RMD'. There was a comment space where I stated that I had submitted a request, but it did not happen until early January. It did not calculate a penalty, and I never heard anything after. The following year I did pull an additional RMD, and so the form listed a double withdrawal. So the intent and actions were correct.

I also have TIAA accounts from my second career (in process still). If TIAA is that much of a pain, then I will move those funds over to Fido after I no longer pull a paycheck from the university. Pulling RMDs from Fido is easy peasey.
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Old 10-31-2017, 04:38 PM   #44
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Originally Posted by kaneohe View Post

Oh yes.....Thank you for reminding me! I did say I'm confused and entangled! lol! So, I can say I took the RMD early January 2017 to make up for 2016, and that I'm taking another in 2017 for 2017, right?

And I definitely have proof of this. Thank you again!!! :-)
No, I think you say you requested the RMD in Oct.1016 but the request was not processed until early January 2017.
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Old 10-31-2017, 06:23 PM   #45
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I wonder why they can't do anything until you are done with your taxes. What does your taxes being done have to do with them? And what are they saying they will do, once your taxes are done?
Because they want to see with their own eyes whether I'll pay any extra tax that I would ask them to refund to me. They request tons of documentation: 2016 and 2017 "actual" tax returns, "hypothetical return, referred to as a pro forma return for 2016 and 2017 illustrating what the tax burden would've been if the 2017 payment had been made in 2016", etc. If this isn't abuse of privacy I don't know what is. And even though it's entirely their fault, they act as if I were the delinquent!!! You should see the tone of this letter to me.

Well....you asked and I told you...
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Old 10-31-2017, 06:49 PM   #46
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Originally Posted by Clone View Post
I missed withdrawing an RMD from a BDA account a couple years back. I actually forgot about it, and put the order in during December, but Fido was all closed up till after the 1st, and the RMD processed a few days later. Learned the lesson to make a checklist of this stuff and pull that RMD earlier in the year.

I use Turbotax, and if I remember correctly, I answered 'No I did not pull an RMD'. There was a comment space where I stated that I had submitted a request, but it did not happen until early January. It did not calculate a penalty, and I never heard anything after. The following year I did pull an additional RMD, and so the form listed a double withdrawal. So the intent and actions were correct.

I also have TIAA accounts from my second career (in process still). If TIAA is that much of a pain, then I will move those funds over to Fido after I no longer pull a paycheck from the university. Pulling RMDs from Fido is easy peasey.
Oh Clone thank you for telling me your story and I'm so glad that you were able to fix the problem easily. I can see now I've been worrying without reason. But I too learned my lesson and will in the future do this first thing in the year.

However, please do not undo your TIAA account just because I have problems with them, unless you've actually had a bad experience with them too. You may find them fine, I'm sure not everyone doing business with them have problems.

Well, happy ending for both of us!
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Old 10-31-2017, 10:16 PM   #47
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Originally Posted by Rosedala View Post
Because they want to see with their own eyes whether I'll pay any extra tax that I would ask them to refund to me. They request tons of documentation: 2016 and 2017 "actual" tax returns, "hypothetical return, referred to as a pro forma return for 2016 and 2017 illustrating what the tax burden would've been if the 2017 payment had been made in 2016", etc. If this isn't abuse of privacy I don't know what is. And even though it's entirely their fault, they act as if I were the delinquent!!! You should see the tone of this letter to me.

Well....you asked and I told you...
That has nothing to do with sending you a RMD for the current year.
They are just trying to confuse you and the issue.

The issue is:
IF the irs taxes you with a penalty, you will want TIAA to pay you the penalty to make up for their mistake. You may have to sue them for it in the end.

However IF the irs does not impose a penalty (and you get the late 2016 RMD payment added back to the 2016 tax return), then there is nothing TIAA will owe you as no extra payment/penalty other than normal payment will have been made by you.

You must have noticed your 2016 tax return was low on the income side, and you paid less tax for the year than normal. Since it didn't include the late 2016 RMD payment.
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Old 10-31-2017, 10:48 PM   #48
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OP, I think you're making a mountain out of a molehill.

While from what you have wrote while TIAA messed up, you could easily have met your RMD requirement simply by calculating the RMD and doing a withdrawal yourself (assumes that you have online access to the account to do withdrawals).... that way you don't need to send them smail mail requesting an RMD and have them ask for additional information.

Second, if it does become an issue with the IRS, they may waive the penalty with an explanation and the documentation that you have. If they don't then you can raise hell with TIAA to make you whole.

Not sure about TIAA, but we have something set up with Vanguard on my Mom's IRa where they calculate and automatically do her RMD on the day of our choosing (we chose her birthday) so once it is set up it happens like clockwork.
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Old 11-01-2017, 10:46 AM   #49
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OP, I think you're making a mountain out of a molehill.

While from what you have wrote while TIAA messed up, you could easily have met your RMD requirement simply by calculating the RMD and doing a withdrawal yourself (assumes that you have online access to the account to do withdrawals).... that way you don't need to send them smail mail requesting an RMD and have them ask for additional information.

Second, if it does become an issue with the IRS, they may waive the penalty with an explanation and the documentation that you have. If they don't then you can raise hell with TIAA to make you whole.

Not sure about TIAA, but we have something set up with Vanguard on my Mom's IRa where they calculate and automatically do her RMD on the day of our choosing (we chose her birthday) so once it is set up it happens like clockwork.
Thank you. I'll look into withdrawing it myself. However, I don't like automation, prefer to do it myself. Thanx again.
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Old 11-01-2017, 10:53 AM   #50
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First of all, if you take two withdrawals in 2017, you still only get one 1099. Also, did you ask when exactly the funds were withdrawn? Receiving the check on January 10 doesn't matter - it matters when the funds were deducted from your IRA account. What does your IRA statement show for the date of the withdrawal from the account?

The penalty the IRS levies on RMD failures is discretionary, and probably one of the biggest "wiggle room" areas in the tax law (probably because it involves older citizens that may have issues remembering to do it). My grandmother had an issue one year, and I wrote a letter for her to attach to the tax return that should have had the distribution, explaining the situation. I also attached proof that she took the withdrawal that she SHOULD have taken the previous year, as soon as she discovered the error, in addition to that year's scheduled withdrawal. They ended up not levying any penalty.

It doesn't mean you are home free - but just gather up as much evidence as you can to prove your case. It wouldn't hurt to file that paperwork at your broker, if it isn't too terribly onerous, and include a copy of that in your tax return filing.

It likely isn't worth involving a lawyer or accountant. I would first attempt to just draft a short and sweet letter ot include with your 1040 tax return, explaining the situation. A lawyer or accountant would possibly charge a few thousand just for a simple letter like that. If the IRS rejects your explanation and demands the 50% penalty, THEN it might be worth it to talk to a lawyer.

Hi again, may I ask what kind of broker you mean please? The person who prepares my taxes?:
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It wouldn't hurt to file that paperwork at your broker, if it isn't too terribly onerous, and include a copy of that in your tax return filing.
Thank you so much again!
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Old 11-01-2017, 11:24 AM   #51
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Thank you. I'll look into withdrawing it myself. However, I don't like automation, prefer to do it myself. Thanx again.
Just a few posts ago you said you prefer electronic communications...so I am starting to wonder about , what is you going on here. You've turned a fairly simple question into a marathon...why don't you head over to the Hi I am thread and introduce yourself.
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Old 11-01-2017, 01:07 PM   #52
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That has nothing to do with sending you a RMD for the current year.
They are just trying to confuse you and the issue.

The issue is:
IF the irs taxes you with a penalty, you will want TIAA to pay you the penalty to make up for their mistake. You may have to sue them for it in the end.

However IF the irs does not impose a penalty (and you get the late 2016 RMD payment added back to the 2016 tax return), then there is nothing TIAA will owe you as no extra payment/penalty other than normal payment will have been made by you.

You must have noticed your 2016 tax return was low on the income side, and you paid less tax for the year than normal. Since it didn't include the late 2016 RMD payment.

About your last paragraph, yes, I noticed and was wondering how to fix it. So assuming I won't be penalized, I'll follow your advice by putting my (wrong) 2017 RMD back into my 2016 tax return, then make another (right) RMD withdrawal today, 2017. Am I correct?
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Old 11-01-2017, 01:33 PM   #53
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Do you have a copy of your instructions to the institution?

Another thing to remember is that since your account was not diminished by the RMD in 2016, your year-end balance still included that amount. That undiminished amount will be the basis for your 2017 RMD, very likely. Even if you successfully argue that you shouldn't be penalized for the late RMD, you should make sure you know what the basis will be for 2017.
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That undiminished amount will be the basis for your 2017 RMD, very likely. Even if you successfully argue that you shouldn't be penalized for the late RMD, you should make sure you know what the basis will be for 2017.
Hi again, I'm re-reading the excellent advice and intend to give my wrongly taken 2017 RMD to my 2016 tax return and this will even up the basis, right?

And of course I'm taking now a 2017 RMD for 2017. However, since I won't be doing my taxes until January...I'd be using the UNdiminished basis for the 2017 RMD no? I'm sorry to still have these questions but I got quite dizzy with the many mix-ups my institution created.... :-)
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Old 11-01-2017, 04:14 PM   #54
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About your last paragraph, yes, I noticed and was wondering how to fix it. So assuming I won't be penalized, I'll follow your advice by putting my (wrong) 2017 RMD back into my 2016 tax return, then make another (right) RMD withdrawal today, 2017. Am I correct?
You can include the late 2016 RMD amendment to your 2016 tax return along with the letter you are going to write detailing to the irs exactly how this happened (you requested 2016 RMD in 2016 but the RMD was performed late see the proof) and that this amendment is to correct the 2016 tax return.
Also remember to include a check for the more taxes due
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Old 11-01-2017, 08:24 PM   #55
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You can include the late 2016 RMD amendment to your 2016 tax return along with the letter you are going to write detailing to the irs exactly how this happened (you requested 2016 RMD in 2016 but the RMD was performed late see the proof) and that this amendment is to correct the 2016 tax return.
Also remember to include a check for the more taxes due
Oh how much I appreciate it Sunset that you made it easier for me to understand, but one last question: if I request the 2017 RMD now before the tax return, then my IRA balance is larger since I didn't withdraw from 2016? Also, if I put the RMD check I got, back to the tax return, the balance will be even larger? Please forgive my dumbness...
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Old 11-01-2017, 10:47 PM   #56
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Do you have a copy of your instructions to the institution?

Another thing to remember is that since your account was not diminished by the RMD in 2016, your year-end balance still included that amount. That undiminished amount will be the basis for your 2017 RMD, very likely. Even if you successfully argue that you shouldn't be penalized for the late RMD, you should make sure you know what the basis will be for 2017.
Hi HadEnuff, I'm sorry my poor mind takes so long to understand, but thanks to you and all the other people's precious help here I'm clear on what I have to do and in January I'll have my tax preparer return to Uncle Sam my RMD taken wrongly and will include Form 5329, and all proof...

But...what will happen when I take this year's (2017) RMD with my year-end balance UNdiminished by the 2016 RMD which never took place?. Will this bring consequences? If so how to do it correctly?
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Old 11-01-2017, 11:09 PM   #57
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OP -
RMD stands for Required Minimum Distribution , so to be really safe (and it hardly makes any difference) use the value of your 401K/IRA at whatever value it was on December 31 2016.
This will ensure you are taking out at least the correct amount for the year 2017.
Yes the amount taken out will be higher than it would be if the 2016 RMD had happened at the correct time, but the extra amount will in fact be small, and only for this year.
Succeeding years will be correct.

As an example since I don't know your exact numbers, I used IRA total of $1 Million and age 77 so the RMD would normally be $47,169.81 But since the 2016 amount was not taken out early enough using the Dec 31 2016 number with it added back in, the RMD will be $49,394.81. An extra amount of $2,225

So you can see the "extra amount" needed to be taken out this one year to be safe is only 0.22 % of the total IRA amount, and it's not wasted as you will probably need some extra cash to pay your 2016 tax bill once you add back in the 2016 RMD that should have been claimed as received in the 2016 tax return.
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Old 11-01-2017, 11:56 PM   #58
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OP -
RMD stands for Required Minimum Distribution , so to be really safe (and it hardly makes any difference) use the value of your 401K/IRA at whatever value it was on December 31 2016.
This will ensure you are taking out at least the correct amount for the year 2017.
Yes the amount taken out will be higher than it would be if the 2016 RMD had happened at the correct time, but the extra amount will in fact be small, and only for this year.
Succeeding years will be correct.

As an example since I don't know your exact numbers, I used IRA total of $1 Million and age 77 so the RMD would normally be $47,169.81 But since the 2016 amount was not taken out early enough using the Dec 31 2016 number with it added back in, the RMD will be $49,394.81. An extra amount of $2,225

So you can see the "extra amount" needed to be taken out this one year to be safe is only 0.22 % of the total IRA amount, and it's not wasted as you will probably need some extra cash to pay your 2016 tax bill once you add back in the 2016 RMD that should have been claimed as received in the 2016 tax return.
Oh thank you so much! I understand, it can't hurt my taking out more and that's ok, I just wanted to make sure I'm doing the right thing.
LOL! I have no secret with my numbers but you've demonstrated very clearly how it works.
Thank you again and again....
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Old 11-02-2017, 06:56 AM   #59
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First of all, if you take two withdrawals in 2017, you still only get one 1099. Also, did you ask when exactly the funds were withdrawn? Receiving the check on January 10 doesn't matter - it matters when the funds were deducted from your IRA account. What does your IRA statement show for the date of the withdrawal from the account?

The penalty the IRS levies on RMD failures is discretionary, and probably one of the biggest "wiggle room" areas in the tax law (probably because it involves older citizens that may have issues remembering to do it). My grandmother had an issue one year, and I wrote a letter for her to attach to the tax return that should have had the distribution, explaining the situation. I also attached proof that she took the withdrawal that she SHOULD have taken the previous year, as soon as she discovered the error, in addition to that year's scheduled withdrawal. They ended up not levying any penalty.

It doesn't mean you are home free - but just gather up as much evidence as you can to prove your case. It wouldn't hurt to file that paperwork at your broker, if it isn't too terribly onerous, and include a copy of that in your tax return filing.

It likely isn't worth involving a lawyer or accountant. I would first attempt to just draft a short and sweet letter ot include with your 1040 tax return, explaining the situation. A lawyer or accountant would possibly charge a few thousand just for a simple letter like that. If the IRS rejects your explanation and demands the 50% penalty, THEN it might be worth it to talk to a lawyer.
Hi again, may I ask what kind of broker you mean please? The person who prepares my taxes?:

Thank you so much again!
In your original post, you mentioned your broker wanted you to fill out a bunch of paperwork for your claim, and you didn't know if it would be worth it. That is the paperwork I was referring to.

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You can include the late 2016 RMD amendment to your 2016 tax return along with the letter you are going to write detailing to the irs exactly how this happened (you requested 2016 RMD in 2016 but the RMD was performed late see the proof) and that this amendment is to correct the 2016 tax return.
Also remember to include a check for the more taxes due
Obviously, the OP is free to do what they wish...but if it were my grandmother (or my) taxes, I would simply include the notes and documentation on my 2017 taxes, and leave my 2016 taxes alone, since it would involve the IRS getting a 1099 showing you withdrew $x in 2017, and having to digest a letter saying "I took my 2016 withdrawl in 2017, plus my 2017 RMD, but I'm only paying taxes on the 2017 withdrawal part". Plus their tax preparer doing it correctly, with the chance this gets all mixed in up 2017 (because if the OP amends their 2016 taxes by paying taxes on monies withdrawn in 2017, the OP would have to reduce their taxable income in 2017 by the amount they claimed in 2016).
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Old 11-02-2017, 09:37 AM   #60
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Especially since you have burned before, it might be useful to prevent these problems instead of cleaning up the mess. Sending the request and verifying receipt was a good first step Verifying that it actually got done in a timely manner...........that would have been useful too......esp. if you are staying at the same imperfect institution. You can blame them but you are the one who has to deal w/ the consequences.
I couldn't agree more, kaneohe, thank you! As I mentioned somewhere here, starting now I'm taking the RMDs at my other IRA institution (I split the balance) with which in the past I never had problems. I continue with TIAA as I couldn't get their interest rate anywhere else, but it'll be ok if I don't "rock the boat" and leave it alone like a dormant princess. I'm learning in my ripe old age to take prevention more seriously so I'll do the RMDs first thing in those years, by faxing the requests to the institution.
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