biginning rmd’s
someone who’s birthday is in the last 1/2 of the year, when they turn 70, will turn 701/2 the following calendar year. Since that year will also be the year that they turn 71, if they decide to take a distribution that year, what age is their 1st distribution based on? Would they have to take 2 distibutions that year (age 70 and 71) or do they “catch a break” and only need to take age 71 distibution? Same question if they wait to defer to the following year. Do they take distributions for 70 &71 by 4/1 and age 72 by 12/31?
Permalink Submitted by Alan Spross on Thu, 2007-10-04 21:00
The first distribution year is based on age 71 if they do not defer it.
If they defer it to the RBD year that follows, the two distributions for that year are based on the assumptions in your final question. Note that if they defer, the first distribution year is still based on the account value ending on the year prior to turning 70.5, and the second distribution year is based on the year end value for the first distribution year. An adjustment to the year end balance is no longer made to reflect the deferred distribution of the first RMD.
Permalink Submitted by Al Fry on Thu, 2007-10-04 21:07
The first distribution must come out by 4.1 in year following 70.5. So, to avoid taking out two in one year, if turning 70.5 in first half of 2007, they should take one in 2007 based on age on 12/31/07 (71). Then they can take second RMD in 2008, based on 12/31/07 account balance and age as of 12/31/08 (72). That is why all calculators offer either age 70 or 71 for first RMD. If one waited until 4.1 after turning 70.5, it would still be based on the prevoius year’s calculation.