When does the RMD have to begin?
Posted 08 December 2004 - 10:02 AM
The spouse is also over 70 1/2.
When does the spouse have to begin to receive distributions? If you are over 70 1/2 when you open the account, do you have to commence distributions right away, or the year following?
Posted 08 December 2004 - 10:08 AM
The RMD for the QRP should have been satisfied before the balance was rolled to the IRA. Since this did not occur, the amount rolled over –technically- includes the RMD for the QRP and that amount is ineligible to be rolled over. The wife must correct by figuring the RMD amount for the QRP, and removing that amount from the IRA as a “ return of excess “ contribution. This must be removed by April 15 next year. If she files her tax return on time, she receives an automatic 6-months (up to October 15,2005) to remove the amount
Posted 08 December 2004 - 10:18 AM
So, she rolled over the funds to an IRA and is in the same situation she would have been had she left he money in the QRP. Right?
Posted 08 December 2004 - 12:20 PM
1)Did he die before the RBD, which would determine beneficiary options or
2)Is an RMD required for the year of death?
An RMD is generally required for the year of death, if the year of death is the year the participant retires, and he/she is past age 70 ½, and the plan provides for a delayed RBD until April 1 following the year of retirement.
Let me know if you agree with the following logic.
First , let’s look at 1.401(a)(9)-5(b) , which defines Distribution calendar year.
A calendar year for which a minimum distribution is required is a distribution calendar year. If an employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee attains age 70 1/2, the employee's first distribution calendar year is the year the employee attains age 70 1/2. If an employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee retires, the employee's first distribution calendar year is the calendar year in which the employee retires. In the case of distributions to be made in accordance with the life expectancy rule in § 1.401(a)(9)-3 and in section 401(a)(9)(B)(iii) and (iv), the first distribution calendar year is the calendar year containing the date described in A-3(a) or A-3(b) of § 1.401(a)(9)-3, whichever is applicable.
© Time for distributions. The distribution required to be made on or before the employee's required beginning date shall be treated as the distribution required for the employee's first distribution calendar year (as defined in paragraph (b) of this A-1). The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the employee's required beginning date occurs, must be made on or before the end of that distribution calendar year.
The issue now becomes, when is the employee considered to have retired? Would you agree that “ retire” and "severance from employment" is interchangeable for this purpose? If, so, then the employee’s death is tantamount to the employee being retired…see Treas Reg § 1.410(a)-7(b)(2) (i), which defines Severance from service date as “The date on which an employee quits, retires, is discharged or dies”
If the employee is considered ‘retired’ in 2004, then an RMD is due for 2004 , even though the RBD would be April 1,2005. The RMD for 2004 must be satisfied by the beneficiary and is not rollover eligible.
Posted 08 December 2004 - 01:32 PM
Posted 08 December 2004 - 02:29 PM
Posted 08 December 2004 - 03:17 PM
Posted 08 December 2004 - 04:08 PM
However, the minimum distribution requirements in case of death occurring BEFORE the RBD (which clearly is the case here) are governed by 1.401(a)(9)-3.
If you read the Q&A's under this section, there's no required distribution to a surviving spouse beneficiary in the year of death in the situation described, so the entire amount may be rolled over. It then falls under the IRA RMD rules as the IRA owned by the surviving spouse starting in 2005.
At least that's how I see it.
Posted 08 December 2004 - 04:58 PM
Posted 08 December 2004 - 08:59 PM
MBozek is correct.
New York, NY
Posted 23 December 2004 - 02:56 PM
Individual is age 80, still working. In early 2004 she rollovers a withdrawal from the plan to her IRA.
Individual decides to retire in December, so her RBD is April 1, 2005.
Does the rollover include her RMD being that it was the first distribution for the year ? or does she get a brake because she did not know she was going to retire?
Thanks and happy holidays to all
Posted 03 January 2005 - 06:07 PM
Example: Balance 12/31/03 $100,000. Rollover 5/1/2004 $60,000. Retirement in December 2004 makes first RMD due 4/1/2005. This is determined by dividing the 12/31/03 balance by the factor for her age in 2004. If she's 80 in 2004 that would be 18.7. The 2005 RMD is based on the 12/31/2004 balance and the factor for her age in 2005.
Posted 04 January 2005 - 11:42 AM
"Big lettuce, big carrots, tomatoes like volleyballs."