If you mistakenly forgot to take your Required Minimum Distribution (the minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age) for 2010, there are some steps that you can take in order to avoid the hefty 50% penalty, according to Ed Slott & Company, LLC:

• Take what your 2010 Required Minimum Distribution would have been right away
• File Form 5329 with your 2010 income tax return and attach a letter requesting a waiver of the 50% penalty
• Indicate in the letter that when you realized you did not take your RMD in 2010, you distributed the missed RMD.

More than likely, you will not hear from the IRS because you corrected your error. If you have any additional questions, please make sure to contact your tax professional. Please note, Richmond Brothers does not provide tax advice; this is for informational purposes only.

We are proud to announce that Dave recently completed his Masters of Science in Financial Services (MSFS) from the highly esteemed American College.

For more information, please visit our recent press release.

Congratulations, Dave! We are so honored to have such a distinguished boss and mentor!

A few weeks ago, we covered the forms needed in order to gather your Roth conversion information. This week, we want to review the IRS form that you’ll need to file to report your 2010 Roth conversion.

IRS Form 8606, Nondeductible IRAs, is the form used to report Traditional IRA (or Company Plan) to Roth IRA conversions. Below, we have listed the steps you’ll need to take on Form 8606 depending on your situation. For access to the IRS form, please click on the picture to the left.

DEFERRING TAXES ON CONVERSION MADE IN 2010

• Complete Part II of Form 8606 and make sure in:
• Traditional IRA, SEP, or SIMPLE to Roth IRA conversion: Leave line 19 and the check box next to it blank. Report half the taxable conversion income on line 25a and the remainder on line 25b.
• Company Plan to Roth IRA conversion: Leave line 24 and the check box next to it blank. Report half the taxable conversion income on line 25a and the remainder on line 25b.
• Make sure to keep a copy of Form 8606 to help complete your 2011 and 2012 tax returns.

PAYING ALL TAXES ON CONVERSION MADE IN 2010

• Complete Part III of Form 8606 and make sure in:
• Traditional IRA, SEP, or SIMPLE to Roth IRA conversion: Report all taxable income from the conversion on line 19 and check the box on the same line
• Company Plan to Roth IRA conversion: Report all taxable income from the conversion on line 24 and check the box on the same line

Remember, joint filers who made Roth conversions in 2010 will each need to attach a separate Form 8606 to their return.

Please note, this is for informational purposes only (provided by Ed Slott & Company, LLC) and should not be construed as tax advice. Please consult your tax advisor for additional information.