Maxwell, I totally understand your frustration with that vague IRS letter! I went through something similar with my own RMD penalty situation about 6 months ago. Those acknowledgment letters are intentionally generic - they're basically just saying "we received your paperwork and it's in the system." The good news is that you did everything correctly by filing Form 5329 with an explanation letter and paying the penalty upfront. In my experience, when you handle it this way, the IRS rarely comes back with additional issues. They're mainly looking to see that you've acknowledged the mistake, calculated the penalty correctly (which sounds like you did at $875), and taken steps to prevent it from happening again. I'd recommend waiting at least 12 weeks from your original submission date before getting concerned. The IRS is still dealing with processing backlogs, and RMD penalty cases aren't high priority for them since you've already paid. If you don't hear anything after 3 months, that's usually a sign that your case was processed successfully and closed. Also, don't beat yourself up too much about missing the RMD when your advisor retired suddenly - that kind of unexpected situation is exactly why the IRS sometimes grants penalty waivers if you can demonstrate reasonable cause!

I'm going through almost the exact same thing right now! Filed my Form 5329 about 7 weeks ago for a missed RMD (also due to advisor issues - mine moved firms and the transition got messy). Got that same frustratingly vague acknowledgment letter that tells you absolutely nothing useful. Reading through all these responses is actually making me feel much better about the situation. It sounds like this is just how the IRS operates with Form 5329 submissions - they send the generic "we got it" letter first, then take their sweet time processing everything before sending any kind of final resolution. The timeline everyone's mentioning (8-12 weeks) seems pretty consistent across different people's experiences. I'm trying to be patient but it's hard when you're wondering if you're going to get hit with additional penalties or complications. At least I know I'm not the only one dealing with this kind of confusing communication from the IRS!

I went through a very similar situation when I became trustee of my father's irrevocable trust that owned multiple rental property LLCs. One thing I learned the hard way is to also check your trust document for any specific provisions about inter-entity transactions or capital contributions. Our trust had a clause requiring written trustee resolutions for any transaction over $20,000 between trust-owned entities, which we almost missed. Even though I was the sole trustee, I still had to formally document the decision and keep it in the trust records for potential IRS audits. Also, if you go with the inter-company loan route (which I'd recommend based on Charlotte's advice), make sure to actually service the loan properly. The IRS has been known to recharacterize loans as distributions if payments aren't made consistently. Set up automatic transfers for the payments if possible to maintain the paper trail. The whole process was more complex than I expected, but documenting everything properly from the start saved us headaches later when we had to provide records to the IRS for an unrelated audit.

As someone who recently went through a similar situation with my grandmother's irrevocable trust, I'd strongly echo the advice about the inter-company loan approach. We ended up going that route after initially considering the trust account method. One additional consideration that our attorney pointed out: if you have multiple beneficiaries of the trust, cycling money through the trust account can sometimes create unexpected income tax consequences for them, depending on how the trust's distributable net income is calculated. The inter-company loan keeps everything at the entity level and avoids potential complications with K-1 distributions to beneficiaries. Also, since you mentioned this is across two states, make sure to check if there are any state-specific requirements for related party transactions. Some states have additional disclosure or approval requirements for transactions between entities owned by the same trust. The $45,000 repair sounds urgent - I'd recommend moving quickly once you get your documentation in place. Property issues tend to get more expensive the longer they sit, and having a formal loan structure will give you a clear path for similar situations in the future.

This is such a helpful thread! I'm in a similar boat - just started freelancing and trying to figure out all the tax stuff. One thing I'm still confused about: when you say the deduction is "limited to your business profit," does that mean your gross revenue or your net profit after all business expenses? For example, if my LLC brings in $50,000 in revenue but I have $20,000 in legitimate business expenses (equipment, software, etc.), would my health insurance deduction be limited to $30,000 or $50,000? Also, does anyone know if there's a difference between buying insurance through the marketplace vs. directly from an insurance company when it comes to this deduction? I've been looking at both options and the marketplace seems more complicated with all the subsidy calculations.

I've been following this thread as someone who went through the same confusion last year! One additional consideration that hasn't been mentioned yet: timing matters for the deduction. You can only deduct premiums for months when you were actually self-employed and had no other health coverage available. So if you started your LLC mid-year or had employer coverage for part of the year, you'll need to prorate the deduction accordingly. Also, a practical tip: set up a separate business bank account if you haven't already, and pay your health insurance premiums from that account. It makes record-keeping much cleaner and provides a clear paper trail showing that your business income is what's funding the insurance. The IRS loves good documentation! One more thing - if you're planning to make estimated quarterly tax payments (which you probably should as a self-employed person), factor in the health insurance deduction when calculating those payments. It can significantly reduce what you owe, so don't overpay your quarterlies.

Don't forget about currency conversion fees! When I transferred my savings from Europe, my bank charged me an outrageous amount. Check if your bank has a partner bank in the US - sometimes they offer better rates. Or use a service like Wise or OFX for better exchange rates. I ended up losing almost $800 in fees and bad exchange rates because I didn't look into this first!!

One thing I haven't seen mentioned yet is the timing of when you transfer the money. If you're planning to transfer a large amount, consider spreading it across multiple smaller transfers over a few months rather than one big lump sum. This can help avoid triggering automated bank reporting systems that might flag large international transfers. Also, make sure to keep records of the exchange rates on the day you transfer - you might need this information for tax purposes later. The IRS uses specific exchange rates for different dates, and having your own documentation can save headaches if there are any questions about the USD equivalent value of your foreign earnings. Finally, if you haven't already, consider opening your US bank account first and letting it "season" with smaller deposits before doing the big transfer. Some banks are more comfortable with large international transfers when they already have a relationship with you.

I went through this exact situation two years ago and can confirm that the consensus here is correct - your 401(k) distribution should be reported as ECI on Line 17a of Form 1040-NR. The key principle is that retirement distributions maintain the same tax character as the income that funded them. Since your contributions were made while you were working in the US (and thus earning effectively connected income), the distribution retains that ECI character even though you're now a nonresident alien. I initially made the mistake of reporting mine on Schedule NEC as non-ECI income, but after researching Revenue Ruling 79-388 and consulting with an international tax specialist, I filed an amended return to correct it. The IRS accepted the amendment without any issues. One important note: make sure to check if your tax treaty has any special provisions for retirement distributions. Some treaties provide for reduced withholding rates or other benefits that you don't want to miss out on. Also, keep detailed records of your employment history in the US, as this documentation supports the ECI classification if the IRS ever questions it. Don't let your accountant's advice in the comment below go unchallenged - this is a specialized area where many general practitioners get it wrong.

As someone who recently went through this exact situation, I can confirm that your 401(k) distribution should indeed be reported as ECI on Line 17a of Form 1040-NR. The reasoning everyone has shared here is spot-on - the distribution retains the character of the income that funded it. I made the same mistake initially and reported mine on Schedule NEC, but after doing more research and finding Revenue Ruling 79-388, I realized my error. The ruling makes it clear that retirement plan distributions to former employees maintain their ECI status even after the individual becomes a nonresident alien. One thing I'd add is to be extra careful about the withholding. Your 401(k) plan administrator may have withheld taxes at the standard 30% nonresident rate, but since this is ECI, you might be entitled to a refund depending on your other income and deductions. Make sure to calculate your actual tax liability properly. Also, don't forget to check if your home country's tax treaty has any provisions about retirement distributions - some treaties allow for reduced withholding or provide other benefits that could save you money. The tax treaty analysis can be complex, but it's worth investigating since it could significantly impact your final tax bill.