Miss your RMD? Assess your options

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I missed taking my required minimum distribution (RMD) from my IRA last year. Can I avoid a 2012 penalty before April 15? H.S., Rochester, N.Y.

A. Maybe. If you don’t have a good excuse, you must report the amount owed on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, and pay the appropriate penalty on Form 1040. Follow the step-by-step instructions to figure out how much you will owe. However, if you missed the deadline due to a reasonable cause, you can ask the IRS to waive the penalty. A request for waiver may be included in a letter of explanation attached to your tax return along with Form 5329.

Tip: When you request a waiver, don’t pay the penalty up front. The IRS will notify you if it denies the request.

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