RMD - What comes first

[PainPA]

Is a RMD required to be processed before a rollover out of the plan is processed?

e.g.

Participant DOB is 11/1942

Retired on 04/2013

Sent in paperwork to roll to an IRA in 08/2013

I realize that the RMD can be delayed until April 1, 2014 to take the 2013 RMD and then the 2014 must be taken before 12/31/2014.

The question is do we have to process a mandatory RMD before the request for rollover is processed?

And does it matter if the plan is a 403b vs a 401k?

The plan doc does allow for the later of 70.5 or retirement.

[GMK]

When the participant reaches age 70-1/2 and is no longer employed by the plan sponsor, then the first moneys distributed are deemed to be RMD. So, yes, you do the RMD first, and then the rollover.

[masteff]

Agree. Reg 1.402©-2 Q&A-7 and Reg 1.401(a)(9)-7 Q&A-1

[austin3515]

I've always thought of it like this - someone retires in 2013 at age 75 (just to keep it simple), they're first distribution calendar year is 2013. If they roll it out to an IRA in 2013 without taking the RMD first, they will never take their 2013 RMD, because the 12/31/2012 balance in the IRA is zero. Therefore, you must take it before you close. That is of course the logic that was used when writing the regs in the first place.

[chc93]

Wait... if the first distribution year is 2013, then an RMD for 2013 must be taken... but can be as late as Apr 1 2014. But now, if the total distribution is taken rolled to an IRA in 2013, the 2013 RMD must be paid first? correct? I agree that there is no 2013 RMD from the IRA. So there will be only the 1 RMD in 2013 (from the plan).

[GMK]

You got it right. You can wait until April 1 to take the RMD, but if you take your distribution before then, the first portion of the first distribution(s) is deemed to be RMD until the RMD requirement for 2013 is met.

One RMD from the plan for distribution year 2013. No RMD from the IRA for 2013, because the IRA balance as of 12/31/2012 was zero.

[BG5150]

No RMD from the IRA for 2013, because the IRA balance as of 12/31/2012 was zero.

That is assuming the IRA wasn't in existence already. People do roll money into existing IRAs don't they?

[GMK]

Agreed.

I said "because" to fit the case being discussed, but the more accurate wording would be:

No RMD from the IRA for 2013 if the IRA balance as of 12/31/2012 was zero.