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Missed 2023 RMD payment from annuity due to lack of funds

Forum|Forum|2 years ago
March 25, 2024
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Have an annuity which for years make automatic withdrawals for RMD.

Surrender value is $950

RMV is $14000

Rmd for 2023 was $1400.

Rmd was not taken since amount in surrender value was less than RMD.

Only way to make RMD payments going forward is to annuitize policy.

This will result in automatic RMD payments for 10 years.

But the annuity company says there is no way to pay for the missed 2023 RMD.

What to do?

Many thanks in advance for helping me break out of this circle.

Best answer by JotikaT2

RMD's are not required until you reach a certain age. For 2023, that is 72 years old, but it was 70.5 in 2020. If you haven't reached this age yet, you may not be required to take an RMD from the annuity.

However, if you are above that age, and assuming you are trying to take steps to remedy not taking the RMD, you can request a waiver of the penalty on Form 5329. You will need to submit a letter of explanation as well.

When filing Form 5329, be sure to complete lines 52 (minimum RMD for 2023) and 53 (RMD actually distributed) as prompted. You will need to enter "RC" and the amount of the RMD that wasn't taken but should have been taken on line 54. The difference will be reported on line 55 and tax is paid on amounts on line 55. You will also need to attach a statement letting the IRS know the reason for the shortfall and showing that you are working to remedy the issue going forward.

The IRS will review your information and if they disagree, will send a notice assessing additional tax. Please see this excerpt from the instructions for Form 5329.

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chezpaixAuthor

Don't have other annuities or IRAs to use for the 2023 RMD

J

JotikaT2Answer

RMD's are not required until you reach a certain age. For 2023, that is 72 years old, but it was 70.5 in 2020. If you haven't reached this age yet, you may not be required to take an RMD from the annuity.

However, if you are above that age, and assuming you are trying to take steps to remedy not taking the RMD, you can request a waiver of the penalty on Form 5329. You will need to submit a letter of explanation as well.

When filing Form 5329, be sure to complete lines 52 (minimum RMD for 2023) and 53 (RMD actually distributed) as prompted. You will need to enter "RC" and the amount of the RMD that wasn't taken but should have been taken on line 54. The difference will be reported on line 55 and tax is paid on amounts on line 55. You will also need to attach a statement letting the IRS know the reason for the shortfall and showing that you are working to remedy the issue going forward.

The IRS will review your information and if they disagree, will send a notice assessing additional tax. Please see this excerpt from the instructions for Form 5329.

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chezpaixAuthor

I see I forgot to mention I am 92 years old. I am grateful for your answer but the 2023 RMD was not taken and according to the Annuity company will never be taken.