RMD’s
I turned 70 in Aug. ’07 and will be taking my first RMD in ’08…..As I understand it, the calculation for the first withdrawal is based upon the total value of all of my Traditional IRA’s on Dec. 31, 2007…..The value of these has dropped a lot in Jan. ’08, can I base my first withdrawal as of Jan. 31, 2008 instead of Dec. 31, 2007 thereby not having to withdraw a larger number? Thank you…..
Permalink Submitted by larry shinder on Sat, 2008-02-23 03:02
I don’t think you can do anything however, the following year would be a lower rmd.
You raised a very interesting point. If an investment lost 99% of value, IE: enron, there would be not enough money left to take the RMD.
Permalink Submitted by Alan Spross on Sat, 2008-02-23 18:52
You must use the prior year end figure for calculating RMDs and the current year end figure for calculating the % of distributions that are taxable. Any outstanding rollovers must also be included in the balance.
One situation where a more flexible valuation date can be used is for setting up a 72t plan for substantially equal payments.
In an extreme case where the RMD actually exhausted the IRA, there would be no excess accumulation penalty for not having sufficient funds to take the full RMD. Small comfort at that point.