RMD-First Distribution
Ed-
I have a client who will be 70 1/2 on 3/15/09. If my client takes his first distribution between 1/15 and 3/15/09, will that distribution count as his RMD or will he have to take the RMD amount again after 3/15/09?
Ed-
I have a client who will be 70 1/2 on 3/15/09. If my client takes his first distribution between 1/15 and 3/15/09, will that distribution count as his RMD or will he have to take the RMD amount again after 3/15/09?
Permalink Submitted by Alan Spross on Fri, 2008-11-21 22:13
Any distribution he takes in 2009 will count toward his RMD because the entire calendar year is his first RMD distribution year.
That said, Congress is due to address a proposal in the next few weeks that might result in the waiver of 2009 RMDs due to the financial losses suffered in retirement accounts. If he does not need this money, he might as well wait to see if the RMD will be waived. But if he needs the money, and an RMD is still required, the distribution will count toward his RMD.
Permalink Submitted by charles lore on Sat, 2008-11-22 04:45
When he goes to uniform table to get his life expectancy factor what age will he use? What would the answer be if he turned 70 1/2 on 9/15?
Permalink Submitted by Alan Spross on Sat, 2008-11-22 20:29
He would use age 71 for a 2009 RMD because he would turn 71 by the end of the 2009 year. But if he turned 70.5 after June, he would still be 70 at year end and would then use age 70.
There is a contrasting effect here. If your birthday is in the second part of the year, you will always use age 71 for your first RMD year. That sounds bad, but it is offset by the fact that if your birthday is in the second part of the year, you get to start your RMDs one year later than those with BDs in the first part of the year.