pgold Posted December 11, 2012 Posted December 11, 2012 If a 5% owner (who statred ompany in 1980) established a new plan on 1/1/2012 and said owner turn 70 1/2 on 10/1/2012. The contribution will be made 12/2012. When do RMD commence. I think 4/1/2013, but I am not sure. Thanks
ESOP Guy Posted December 11, 2012 Posted December 11, 2012 I believe it the first year one needs an RMD for is 2013 so it can be as late as 4/1/2014 (with the non-extended date being 12/31/2013). An RMD at 4/1/2012 would be for 2012 which would use the 12/31/2011 balance which if I understand the facts correctly was $0. Edit: See my second answer in the thread I no long think 4/1/2014 is correct but it would be 12/31/2013. My comment below discusses the logic of my thinking.
BG5150 Posted December 11, 2012 Posted December 11, 2012 But what is the 2012 RMD basis? There was no balance on 12/31/11. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
pgold Posted December 11, 2012 Author Posted December 11, 2012 I believe it the first year one needs an RMD for is 2013 so it can be as late as 4/1/2014 (with the non-extended date being 12/31/2013).An RMD at 4/1/2012 would be for 2012 which would use the 12/31/2011 balance which if I understand the facts correctly was $0. It is true the 12/31/11 is $0 Are you sure the first RMD is 4/1/2014.?
masteff Posted December 11, 2012 Posted December 11, 2012 I disagree w/ 4/1/2014... per the Code and Regs, in the case of a 5-percent owner, the April 1 rule only applies for the calendar year in which the employee attains age 70 1/2. So even if a later year is the first year in which an MRD is due, for a 5-percnet owner, those later years must be taken by 12/31. (Note that for a non-5-percent owner, the Code and Regs include the alternate "or retires" which is why those persons might use the April 1 rule at a later age.) Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
pmacduff Posted December 11, 2012 Posted December 11, 2012 If I am understanding the original post correctly IMHO it matters not if this is an owner or non-owner. The 1st RMD definition for everyone is the same: "April 1st of the plan year following the plan year in which the participant attains age 70 1/2". If this participant is 70 1/2 as of 10/01/2012 then the 1st RMD is due by April 1, 2013. The 1st RMD, however, can be taken by 12/31/2012 (based on the 12/31/2012 value) in order to avoid having 2 RMDs paid out in 2013.
GMK Posted December 11, 2012 Posted December 11, 2012 The 1st RMD, however, can be taken by 12/31/2012 (based on the 12/31/2012 value) You meant (based on the 12/31/2011 value) for the RMD for 2012, yes?
pgold Posted December 11, 2012 Author Posted December 11, 2012 If I am understanding the original post correctly IMHO it matters not if this is an owner or non-owner. The 1st RMD definition for everyone is the same: "April 1st of the plan year following the plan year in which the participant attains age 70 1/2". If this participant is 70 1/2 as of 10/01/2012 then the 1st RMD is due by April 1, 2013. The 1st RMD, however, can be taken by 12/31/2012 (based on the 12/31/2012 value) in order to avoid having 2 RMDs paid out in 2013. But what if there is a $0 account balance as of 12/31/2011? What would you distribute on 4/1/2013?
GMK Posted December 11, 2012 Posted December 11, 2012 zero I agree with you that taking the first RMD in 2012 avoids two in 2013. The RMD amount for 2012, however, is based on the 12/31/2011 balance.
ESOP Guy Posted December 11, 2012 Posted December 11, 2012 If I am understanding the original post correctly IMHO it matters not if this is an owner or non-owner. The 1st RMD definition for everyone is the same: "April 1st of the plan year following the plan year in which the participant attains age 70 1/2". If this participant is 70 1/2 as of 10/01/2012 then the 1st RMD is due by April 1, 2013. The 1st RMD, however, can be taken by 12/31/2012 (based on the 12/31/2012 value) in order to avoid having 2 RMDs paid out in 2013. Strictly speaking you are right but the first RMD is due by 4/1/2013 but its amount is zero. However, I think now I want to change my first answer. since the first RMD is due 4/1/2013 (even if zero) I believe the second RMD is due by 12/31/2013 based on the 12/31/2012 balance. But you can't extend it out to the 4/1/2014. I didn't think it out well.
ESOP Guy Posted December 11, 2012 Posted December 11, 2012 It is true the 12/31/11 is $0Are you sure the first RMD is 4/1/2014.? No I have thought about it more and think it is 12/31/2013 is when the first payment to him is due, but it is strictly speaking the 2nd RMD. It is just the first RMD was for an amount of zero.
pgold Posted December 11, 2012 Author Posted December 11, 2012 It is true the 12/31/11 is $0Are you sure the first RMD is 4/1/2014.? No I have thought about it more and think it is 12/31/2013 is when the first payment to him is due, but it is strictly speaking the 2nd RMD. It is just the first RMD was for an amount of zero. Thank you
pmacduff Posted December 11, 2012 Posted December 11, 2012 GMK caught me for typing too fast...I did mean 12/31/2011 value which was $0 for the 1st RMD calc! Sorry!
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