2 RMD in same year
If I turn 70.5 in Jan. of 2007, and therefore turn 71 July of 2007, do I have to take the 71 yr distribution by Dec. 31 of 2007 and the 70.5 distribution by 04/01/2008? Or is the age 71 factor used for the following year?
If I turn 70.5 in Jan. of 2007, and therefore turn 71 July of 2007, do I have to take the 71 yr distribution by Dec. 31 of 2007 and the 70.5 distribution by 04/01/2008? Or is the age 71 factor used for the following year?
Permalink Submitted by Alan Spross on Thu, 2008-12-04 18:13
Let’s separate this into the two distribution years:
1) First distribution year is 2007. You use the 12/31/06 balance and the age 71 divisor for that year. The distribution must be made no later than 4/1/08.
2) Second distribution year is 2008. Use the 12/31/07 account balance and age 72 for the divisor. This RMD must be taken by 12/31/08.
Always use the age that you will attain by the end of each distribution year. For 2009, you will use age 73.
If you missed the 4/1/08 deadline, take the distribution now and File Form 5329 requesting a waive of the excess accumulation penalty for Reasonable Cause. Use the best true “excuse” that you can in the explanation. The IRS has been amenable to waiving the penalty, and may be even more so next year due to the financial crisis and 2008 RMDs being based on higher 12/31/07 balances.