Mister Met Posted February 12, 2015 Posted February 12, 2015 Cash balance plan, lump sum is available. Ppt is not 5% owner. Ppt terminates from active employment at age 73 and takes a full lump sum distribution immediately. Is a portion of this distribution considered an RMD and therefore not permitted to be rolled over? Required beginning date under the plan is later of age 70 1/2 and retirement date.
Effen Posted February 12, 2015 Posted February 12, 2015 yes. You also need to be careful because if he takes a lump sum, the piece not eligible for rollover it probably 2-yrs of MRDs - current year's and the prior year's. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
Mister Met Posted February 12, 2015 Author Posted February 12, 2015 So then if the distribution is 5/1/15, and the ppt turned age 70 1/2 in 2012, would this include MRDs for 2012, 2013, 2014, 2015? A little confusing because ppt was active (and not a 5% owner) up until 5/1/15 and was not required to receive anything until now. Thanks.
GMK Posted February 12, 2015 Posted February 12, 2015 There is no RMD for the years before the year in which the participant retired.
My 2 cents Posted February 12, 2015 Posted February 12, 2015 So then if the distribution is 5/1/15, and the ppt turned age 70 1/2 in 2012, would this include MRDs for 2012, 2013, 2014, 2015? A little confusing because ppt was active (and not a 5% owner) up until 5/1/15 and was not required to receive anything until now. Thanks. There would be a MRD for 2015 at least (even though the first distribution would not have been due until 4/1/16). As noted by others, there would be no MRD for 2012, 2013 or 2014, since the individual was still active through the end of those years. There would also have to be a MRD for 2016. I am not sure on this point - does that have to be held back from the 5/15/15 rollover or can it be taken from the IRA in 2016? Always check with your actuary first!
mbozek Posted February 12, 2015 Posted February 12, 2015 2016 RMD cannot be take before Jan 1, 2016. Any distribution in 2015 can only be allocated toward 2015 MRD. mjb
Effen Posted February 12, 2015 Posted February 12, 2015 Just cleaning up my earlier post...if he is taking the distribution in the year in which he terminated, than I agree, it is only the current year's MRD that is not eligible for rollover. I was thinking of the typical case where they defer receipt of the MRD until the April 1 following, in which case you end up with 2 distributions (one for prior year & one for the current year) that are not eligible for rollover. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
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