Armstrong Financial Strategies
Morris Armstrong founded Armstrong Financial Strategies in 2001 as fee-only firm. The firm does not accept commissions or referral fees and the only source of its income is from the client. Morris has taught at Marymount College in Tarrytown, NY and has written extensively on the subject of investments, taxes and planning for Multex Investors, which Reuters purchased in 2003.
Morris has also been active in the field of divorce planning, and in 2008, the Connecticut Law Tribune recognized his efforts. The lawyers in the state voted him as one of the top three planning firms in the state.
Morris has written for and been quoted in numerous publications including the Wall Street Journal, New York Times, Financial Planning magazine, Wealth Manager Magazine and Yahoo Finance. His investment philosophy has been shaped by both John Bogle and Eugene Fama, and is his portfolios, which are a blend of passive and active vehicles, reflect this.
While he enjoys divorce planning, it can be draining and he prefers not to work with those couples who believe that “War of the Roses” was a manual for divorce. He enjoys his role as an Enrolled Agent helping people resolve their issues with the IRS, whether it is a notice or something more involved such as an audit or offer in compromise.
BBA, Banking, Pace University
Assets Under Management:
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The proper procedure is to take the distribution as soon as possible after the fact. You already did this. The income is reported on your 2018 return. When you complete the 5329 make sure that you state why you failed to take it and the corrective action that you took. The penalty is 50% of the RMD and that is the amount which you ask to have waived. I would not include the penalty in the tax payment since it is very likely that the waiver will be granted.
Good news, life insurance proceeds paid as a death benefit are generally exempt from income tax. There are very few instances where it is taxable and those tend to be business related.
You should always keep in mind that on the federal level, a certain amount of your income is exempt. This is the sum of your personal exemption and your standard deduction. A couple over 65 years old will have the first $23,200 dollars of taxable income exempt. The 10 percent bracket would allow you to add about $18,450 to that number. A Roth distribution does not have any impact on that number, nor does any return of capital from an annuity or other investment.
In the 10% and 15% brackets, qualified dividends, and capital gains are not subject to tax but are included in the AGI calculation. I would suggest that each year you plan ahead and determine what level of taxation is comfortable for you and keep within that limit. Keep in mind that if you are married, when you or your spouse pass away, the following year, the tax brackets will shrink dramatically and the surviving spouse may be forced into a higher bracket.
It seems to me that you do like to plan ahead and good luck!
I think that you and your spouse need to sit down with an Enrolled Agent and discuss your situation. There are several possible scenarios ranging from whether the debt is accurate to what is your ability to pay.
Depending on your incomes, assets and other factors, you may be a candidate for an Offer in Compromise, in which case the IRS will settle for less than full repayment.
You need to be aware that the IRS has a 10-year statute in which to collect the debt and looks at various options, including partial reduction and then a 72-month payment plan.
Your situation is not one for a Do IT Yourselfer, in my opinion, and you should seek professional advice.
An Enrolled Agent is federally licensed to represent taxpayers before the Internal Revenue Service and is the highest credential that it awards. There is the National Association of Enrolled Agents in Washington, DC add the website is NAEA.org. If you are interested in speaking with an EA, you may find them listed there.
I am an EA and have been in practice for a decade, and the IRS does have paths towards resolution. Good luck!
Relax - if the money is at a US brokerage firm they will issue you a check and not have anything to worry about. They can also ACH the money into your bank account.
The fact that you may get a deposit of $100,000 is no big deal and the deposit is not subject to reporting. As weird as it may sound, if the transfer was reportable, and you took steps to break down the deposits into amounts less than 10K, you have committed a felony under the structuring provisions which are engaging in behavior to prevent or obstruct the reporting of the transaction.