Required Minimum Distributions from an IRA and a Profit Sharing Plan
Posted 02 December 2003 - 01:31 PM
Posted 02 December 2003 - 01:35 PM
No citations, but asked and answered many times on the board. You CAN add up the value of all your IRAs and take the money from only one, but PSP and IRAs are treated separately.
Posted 02 December 2003 - 01:47 PM
Posted 02 December 2003 - 01:54 PM
Q-1. What distribution rules apply if an employee is a participant in more than one plan?
A-1. If an employee is a participant in more than one plan, the plans in which the employee participates are not permitted to be aggregated for purposes of testing whether the distribution requirements of section 401(a)(9) are met. The distribution of the benefit of the employee under each plan must separately meet the requirements of section 401(a)(9).
Posted 02 December 2003 - 02:07 PM
Believe it or not, just got off the phone with someone that asks a very interesting question.
Client of mine had a MPP for most of 2003, is over 70 1/2 and has been withdrawing a monthly amount. He then rolls his (substantial) balance to an IRA. Since IRAs and pensions are separate, what to do? Can't believe this has never come up with me before.
Posted 02 December 2003 - 02:48 PM
I think the above holds true for virtually all situations
Also: first dollars distributed during the year are considered to be RMD dollars, so were the monthly payments treated as such? Person can't roll over entire MPP balance to an IRA until the RMD for the year has been met.
Posted 02 December 2003 - 04:48 PM
Posted 02 December 2003 - 05:05 PM
From the 1099-R instructions:
Corrected Form 1099-R:
[I]f you transmit a direct rollover and file a Form 1099-R with the IRS reporting that none of the direct rollover is taxable by entering 0 (zero) in box 2a, and you then discover that part of the direct rollover consists of required minimum distributions under section 401(a)(9), you must file a corrected Form 1099-R.
If IRA has no money at 12/31/02, then no RMD required during 2003 from the IRA.
Posted 02 December 2003 - 06:29 PM
Specifically, anything portion short of the RMD amount is an ineligible rollover and should be distributed by the IRA Custodian, and a 1099 issued.
End result seems to be a push.
Posted 03 December 2003 - 09:24 AM