December 2024
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, 2024, to each IRA accountholder who died during 2024, and to any IRA accountholder who made a reportable contribution for 2024 during 2024. The deadline to furnish the FMV statement is January 31, 2025.
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 on one statement as long as there were three separate sections.
There must be a sentence on the FMV statement informing the recipient that the FMV information (Balance as of December 31) will be furnished to the IRS when the 2024 Form 5498 will be filed with the IRS in May of 2025.
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 accountholder.
Why is it required to furnish the FMV statement by January 31, 2025? A taxpayer who has basis within a traditional 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, SEP-IRAs, and Roth IRAs. The penalty is $100 PER DAY for failing to furnish the FMV statement for a SIMPLE-IRA.
RMD Notice for 2025
An IRA custodian/trustee must furnish an RMD notice to each traditional/SEP/SIMPLE-IRA accountholder who was born during 1952 or earlier.
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 Notice.
First, the deadline applying to the specific IRA accountholder must be set forth. This will be December 31, 2024, for an individual who is older than age 73 in 2025 or April 1, 2026, if the individual attains age 73 in 2025. Second, there must a sentence informing the individual that the IRS will be informed on the 2024 Form 5498 that he or she is subject to the RMD rules for 2025. Third, the individual must be informed of his or her RMD amount for 2025 or that such amount has not been calculated, but will be if the individual contacts the IRA custodian/ trustee and requests that the calculation be made.
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 require that there be an RMD distribution made to an inheriting beneficiary. A beneficiary who fails to take an RMD will owe the RMD tax of 10% or 25% 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 fails to furnish a complying RMD notice.
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