Institution missed my 2016 RMD!!!

[Rosedala]

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Originally Posted by kaneohe MooreBonds gave you good advice.........and MB did NOT say you should not take the RMD for 2017. MB said that if you took another RMD this yr, you would only get one 1099 combining both withdrawals. The Jan w/d was really for 2016 and the other later one (if you do it) will be for 2017. If you don't take another for 2017, you will have missed an RMD totally , whether you want to think of it as missing 2016 or 2017 is up to you. I am sure IRS will not be happy. Others have also given you good advice that you should fess up to IRS , show that you made the w/d as soon as you found out (early Jan is pretty good) and ask for forgiveness (the waiver of penalty). If you don't take another w/d for 2017, then your story won't fly as well.

THANK YOU SO MUCH kaneohe, and yes, I'm so in awe of, and gratitude to, all the knowledgeable and kind souls who are helping me so well here!

It seems I did misinterpret MooreBands' excellent advice (thank you MB!!!). I'm off NOW to prepare this year's RMD to make sure not to exacerbate the boss: IRS, and yes I'll send a "fess up" and proof that I requested it properly (wish I could enter TIAA's office and steal my letter!).

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show that you made the w/d as soon as you found out (early Jan is pretty good)

An excellent argument but sadly I didn't take the w/d in Jan. and won't be able to prove it, though I'll do it today! Since this mess happened, I just got it off my mind - other life's problems, dilemmas, family illnesses, etc. (maybe subconscious runaway from this mess?). My IRAs are split with Penfed which is a good and responsible CU, so there will be no problem this time. :-)

Again thanks a lot to you and to all the other members in this thread!

[iloveyoga]

I worked in the business and this happened rarely. I have never heard of the IRS assessing the penalty. I would just claim it according to the 1099 they issue. I would also track your own RMDs in the future.

[Rosedala]

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Originally Posted by iloveyoga I worked in the business and this happened rarely. I have never heard of the IRS assessing the penalty. I would just claim it according to the 1099 they issue. I would also track your own RMDs in the future.

Hi iloveyoga, not too sure what you mean...but thank you for trying to help. I give my 1099s to the tax preparer, but this time I'll also ask her to include a few clarifying documents.

How do you track one's RMDs more than what I've been doing - instructing the institution how I expect to have done this particular transaction AND make sure deduction is made BEFORE END OF YEAR IN QUESTION? I'm changing the institution so I don't expect anymore problems, but please do tell me of a better way? Thanks a lot!

[gayl]

Please excuse my stupid question, but here I go. Who controls your process?

When I enter a deduction on Schwab to transfer something out of my IRA, it happens at midnight on that day or the next day at the latest. Currently I'm getting out the dividends in cash, less of course the amount I state withheld for state and federal taxes which they pay to IRS & FTB. Are you saying that if you ask your investment firm to transfer money from your IRA to your brokerage account there's a two-month delay? If that's the case, totally understand transferring to another investment house. Think -- Schwab (or Fidelity / Vanguard -- they're also automated so you control timing like with Schwab)

As to tracking more than 1 RMD, why not combine them & take from 1 account? KISS (keep it simple s.)

[Rosedala]

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Originally Posted by Bryan Barnfellow Ah, TIAA...I am a fellow client and have watched in dismay the sad deterioration in their customer service and overall efficiency over recent decades. They used to be different. If the IRS assesses a penalty, I would definitely pursue a reimbursement from TIAA. Note: the New York Times recently ran a negative story on TIAA's behavior. In your letter you might reference that story and say that absent a timely reimbursement your next letter will copy the Times' financial desk. -BB

Hello and thank you Bryan! So you are also TIAA's client, well you must be smarter than I to avoid a mess like mine... lol! You're right some years back I never had problems of any nature with them. With me it started around 2011 or so.

LOL! I'll be sure to threaten TIAA with giving my story to the NYTimes if they continue to give me a hard time. lol!

Thanks so much again! :-)

[kaneohe]

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Originally Posted by Rosedala ....................... An excellent argument but sadly I didn't take the w/d in Jan. and won't be able to prove it, though I'll do it today! ........................

didn't you say the 2016 RMD was withdrawn just slightly late in early Jan 2017?

[Rosedala]

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Originally Posted by gayl Please excuse my stupid question, but here I go. Who controls your process? When I enter a deduction on Schwab to transfer something out of my IRA, it happens at midnight on that day or the next day at the latest. Currently I'm getting out the dividends in cash, less of course the amount I state withheld for state and federal taxes which they pay to IRS & FTB. Are you saying that if you ask your investment firm to transfer money from your IRA to your brokerage account there's a two-month delay? If that's the case, totally understand transferring to another investment house. Think -- Schwab (or Fidelity / Vanguard -- they're also automated so you control timing like with Schwab) As to tracking more than 1 RMD, why not combine them & take from 1 account? KISS (keep it simple s.)

Hey Gail don't say that, I'm glad you asked. I control the process...partly, by instructing how much RMD to deduct for what year and when. Then... it's up to them to follow the simple instructions. I'm old - I don't like automated transactions if I can help it. LOL!

I've done transfers to and from institutions and don't remember any taking 2 months!!! If you refer to the advance time to send them instructions for deducting RMD, yes, I guess the earlier the better to avoid a mess like the present. Having said all of that...I'm sorry I'm not sure I understood your post and whether my answer made sense?

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As to tracking more than 1 RMD, why not combine them & take from 1 account? KISS (keep it simple s.)

This is a super great question, I too prefer simplicity above all, but in this case it's a matter of interest: if I merge them the interest will be reduced drastically... :-)

[iloveyoga]

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Originally Posted by Rosedala Hi iloveyoga, not too sure what you mean...but thank you for trying to help. I give my 1099s to the tax preparer, but this time I'll also ask her to include a few clarifying documents. How do you track one's RMDs more than what I've been doing - instructing the institution how I expect to have done this particular transaction AND make sure deduction is made BEFORE END OF YEAR IN QUESTION? I'm changing the institution so I don't expect anymore problems, but please do tell me of a better way? Thanks a lot!

Thanks, my main point was I don't think you need to worry about the 50% penalty, I have not seen that assessed. I assume it would be if someone was trying to circumvent the IRS rules. Hopefully you don't have this problem in the future with your new institution.

[Rosedala]

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Originally Posted by kaneohe didn't you say the 2016 RMD was withdrawn just slightly late in early Jan 2017?

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!!! :-)

[ERD50]

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Originally Posted by Rosedala Quote: As to tracking more than 1 RMD, why not combine them & take from 1 account? KISS (keep it simple s.) This is a super great question, I too prefer simplicity above all, but in this case it's a matter of interest: if I merge them the interest will be reduced drastically... :-)

I think it was meant to combine the RMD, not combine the accounts (unless that also makes sense).

IOW, you can have any number of accounts, your RMD is based on their total EOY value. But one RMD for the total from one of them can satisfy all of them (or any combo that equals the total RMD).

-ERD50

[Rosedala]

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Originally Posted by iloveyoga Thanks, my main point was I don't think you need to worry about the 50% penalty, I have not seen that assessed. I assume it would be if someone was trying to circumvent the IRS rules. Hopefully you don't have this problem in the future with your new institution.

Yes it makes sense, I guess they must have some intuition into who tries to circumvent their rules and who is just an idiot like me lol! Did you say you worked for the IRS? Just curious.

Thanks, some years back I had my IRAs at Penfed and every RMD went smooth and in order for years. So without having to merge these I'm starting today making these w/l at Penfed.

[Rosedala]

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Originally Posted by ERD50 I think it was meant to combine the RMD, not combine the accounts (unless that also makes sense). IOW, you can have any number of accounts, your RMD is based on their total EOY value. But one RMD for the total from one of them can satisfy all of them (or any combo that equals the total RMD). -ERD50

Hi, I do combine the 2 RMDs (my total IRAS), but not the accounts as I'd lose on interest rates. :-)

[Rosedala]

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Originally Posted by audreyh1 Is there some time limit that institutions require for RMDs for a given year?

Not sure but I believe you can withdraw the RMD at any month of the year in question.

[Rosedala]

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Originally Posted by jebmke Use form 5329 to request a waiver of the penalty. Include a short note explaining that there was an administrative error and it has been corrected and future RMDs will be made on time. I have done this for clients several times and the waiver has always been granted.

Oh thank you so much! I'm making a note of this too. What type of work do you offer your clients?

[jebmke]

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Originally Posted by Rosedala Oh thank you so much! I'm making a note of this too. What type of work do you offer your clients?

I do free tax preparation (and help manage 10 sites) with the AARP/TaxAide program. It is a volunteer organization.

[gayl]

Thanks ERD50. I'm all for simplicity but the beneficiary ratios are too complicated to combine. Relieved that I can at least combined the RMD amounts. I'll be doing it in 5 years so gleaning information here

Rosedala, I'm not selling any yet but do have to enter the withdrawals so maybe not really automated. But your OP is a perfect example of why I want to be in the driver's seat

[Rosedala]

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Originally Posted by jebmke I do free tax preparation (and help manage 10 sites) with the AARP/TaxAide program. It is a volunteer organization.

Oh I have mine done also by agents of AARP at a senior center in NYC. I find them much more efficient than professionals and so you must be too. They are very careful and check one another's tax returns. I was (am) very impressed and feel secure.

[Rosedala]

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Originally Posted by HadEnuff Unless it creates some other hardship, you might want to consider your instructions to the institution to make the RMD in November, to give yourself a month or two to follow it up, and to give the institution more time to fix what they mess up.

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.

[ivinsfan]

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Originally Posted by Rosedala Hello and thank you. I sent it on October 14, 2016, by regular USPS mail which receipt by them I verified by telephone (more than once being they did this and other errors in the past too). I think 3 months is more than ample to make such a simple communication, no? Well, my letter was SO absolutely explicit yet of only approximately 3 paragraphs of 3 lines or so each, a 6 year old would definitely understand it! lol! I can't help to think the person who handled this is either on some drugs, or mentally retarded or just plain stupid, OR some disgruntled employee who deliberately thought this was punishing his/her boss? Who knows... I too prefer electronic communication - it's easier and faster - but most corporations prefer the phone or snail mail. In fact I searched the net for emails for various corporations especially for the TIAA's CEO and couldn't find any. Occasionally you find some but...they aren't genuine. Yes, I know: "secure emails", but it's a whole project with passwords (which lately, of course, have to be much more undecipherable (really?)), security questions, etc. etc. etc. I just need time to condition my mind to all of these projects, so soon I'll have to surrender and just do it! lol! Thanks again for helping.

It odd you've had this happen more than once...it's not really correct that most corporations prefer snail mail or phone....so when these things happen you'll probably get a better faster outcome when you don't throw around words like gross negligence, and mentally retarded or just plain stupid. How would some employee deliberately messing up your account harm their boss?

[Travelfreek]

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 at his much higher tax bracket 25% marginal vs. her 0% (she made less than $14k a year total, most of which was SSA). Think about that aspect as you take your RMDs (take larger distributions if it doesn't affect your tax bracket even if you keep the money for yourself).