January 31, 2018 is a Wednesday and so it is the
deadline for furnishing three required IRA forms. An IRA
custodian/trustee must furnish (i.e. mail, email, fax or
personally deliver) the following to its IRA account
holders and its inheriting IRA beneficiaries. If this deadline
would be missed, the IRS may assess the fines discussed
within the article.
2017 Form 1099-R
Any person (accountholder or beneficiary) who
received a distribution(s) from an IRA totaling more than
$10 for the year must be furnished a 2017 Form 1099-R.
This Form 1099-R must be prepared on a per plan
agreement basis. That is, if a person would have two traditional
IRAs and one Roth IRA, then he or she would
need to be furnished three Form 1099-Rs. In addition,
there must be a Form 1099-R prepared for each applicable
distribution code. For example, if a person has traditional
IRA and one distribution required the use of
Code “1”, one the use of code “3” and one the use of
Code “7”, then three Form 1099-Rs must be furnished.
When an individual receives more than one copy of
the Form 1099-R, then it is mandatory for the IRA custodian/
trustee to insert a unique number in the account
number box located in the lower left hand corner of the
form. Even though there will be times when furnishing
this account number is not required, the IRS encourages
IRA custodians/trustees to voluntarily furnish it. This
account number allows the IRS to process the submissions
of any corrected forms.
If the IRA custodian would fail to timely furnish a
2017 Form 1099-R or furnishes one prepared with
errors, then the IRS may assess a fine of $250 per form
unless certain exceptions would apply.
Fair Market Value (FMV) statements
An IRA custodian must furnish a FMV statement to
each IRA accountholder and each inheriting beneficiary
having a balance as of December 31, 2017, to each IRA
accountholder who died during 2017, and to any IRA
accountholder who made a reportable contribution for
2017 during 2017. The deadline to furnish the FMV
statement is January 31, 2018.
This FMV statement must be prepared on a per plan
agreement basis. That is, if a person would have two traditional IRAs and one Roth IRA, then he or she would
need to be furnished three FMV statements these could
be combined as long as there were three separate sections.
There must be a sentence on the statement informing
the recipient that the FMV information (Balance as of
December 31) will be furnished to the IRS when the
2017 Form 5498 will be filed with the IRS in May of
The IRA Custodian/trustee may, but is not required, to
furnish contribution and earnings (including interest)
information on the FMV statement for traditional IRAs,
SEP-IRAs and Roth IRAs. However, a special rule applies
for SIMPLE-IRAs. In the case of a SIMPLE-IRA, the IRA
custodian must furnish a detailed statement listing all
contributions (dates, and amounts) made by the
employer on behalf of the SIMPLE-IRA accountholders.
Why is it required to furnish the FMV statement? A
taxpayer who has basis within a traditional IRA, SEP-IRA
or SIMPLE-IRA needs the FMV for purposes of completing
the Form 8606 to determine the taxable portion of a
distribution and the nontaxable portion.
The IRS may assess a penalty of $50 for each failure to
furnish the FMV statement for traditional IRAs, SEPIRAs,
and Roth IRAs. The penalty is $100 PER DAY for
failing to furnish the FMV statement for a SIMPLE-IRA.
RMD Notice for 2018.
An IRA custodian/trustee must furnish each traditional/SEP/SIMPLE-IRA accountholder who was born on or
before June 30, 1938 and who has a balance as of
December 31, 2017 with an RMD Notice. This RMD
notice must be furnished to ALL such accountholders
and not only to those individuals who attain age 701/2 in
2018. The RMD notice is not required to be furnished to
an individual who only attains age 70 in 2018 (i.e. born
between July 1, 1938 and December 31, 2018).
There is no requirement and no need to furnish an
RMD Notice to a Roth IRA accountholder since the
RMD rules do not apply to a Roth IRA accountholder
while he or she is alive.
Three items must be set forth in the required RMD
First, the deadline applying to the IRA accountholder
must be set forth. This will be December 31, 2018, for an individual who is older than age 701/2 in 2018 or
April 1, 2018, if the individual does attain age 701/2 in
2018. Second, there must a sentence informing the individual
that the IRS will be told on the 2017 Form 5498
that he or she is subject to the RMD rules for 2018.
Third, the individual must be informed of his or her
RMD amount for 2018 or that such amount has not
been calculated, but will be if the individual contacts
the IRA custodian/trustee and requests that the calculation
Although the RMD laws apply to an inheriting IRA
beneficiary of all four types of IRAs, current IRS rules do
not require the IRA custodian/trustee to furnish an RMD
notice. CWF strongly suggests you do so. The model IRS
IRA forms do require that there be an RMD distribution
made to an inheriting beneficiary. A beneficiary who
fails to take an RMD will owe the 50% tax and may well
argue that the custodian/trustee should pay some of this
tax for its failure to notify or payout a RMD.
The IRS may assess a fine of $50.00 for each time an
IRA custodian/trustee would fail to furnish a complying
In summary, an IRA custodian/trustee must furnish the
2017 Form 1099-Rs, 2017 FMV statements, and 2018
RMD Notices by January 31, 2018 or it will be subject
to being fined by the IRS.