RMD from rollover IRA the year I roll it over???
I will be 72 as of the end of this year. I have IRA’s that I have been taking RMD’s on for the last 2 years. I am still employed, but recently, my employer was sold. I opted to roll my 401-k to an IRA.
My question is: Do I have to take a RMD on that money? If yes, what do I base the divisor amount on? Would it be the 12/31/ value of the 401k or the value when I rolled the money.
Again, I am still working for the same employer.
Thanks,
Permalink Submitted by Alan Spross on Thu, 2008-12-11 19:56
If you remain working for that employer, you are not yet in a plan RMD year. If fact, even if your plan required RMDs to start at 70.5 rather than after you separated from service, you could roll that RMD over to an IRA because it was just a plan RMD, not an IRS required statutory RMD.
Therefore, you do NOT have to take an RMD on the plan money for the year of rollover. However, your IRA balance on 12/31/08 will obviously be higher because of the rollover and will increase your IRA 2009 RMD.
In summary, your 2008 RMD from your IRA will not be affected by the rollover.
Permalink Submitted by Richard Davis on Fri, 2008-12-12 15:38
Thanks!!! That is great news. Going forward, I will have to take RMD from the plan money that is now in an IRA in 2009. Is that correct?
Permalink Submitted by Alan Spross on Fri, 2008-12-12 21:37
Well, it was yesterday.
But both houses of Congress today passed legislation that Bush is sure to sign that will suspend RMDs due in 2009.
So – even better news.
Permalink Submitted by Marcia Brill on Fri, 2008-12-19 18:19
Thanks for your answer Alan. i guess I will wind up taking money from all 3 IRAs. I don’t know how to do this another way. These 2 funds never did well even before all this happened with the stock market and I should have gotten out of it a long time ago.
I also work part time, do i still have to do an RMD?
Permalink Submitted by Alan Spross on Fri, 2008-12-19 18:47
Yes, you still must take RMDs from your traditional IRA accounts. However, as noted before, 2009 will be an exception, so you can skip 2009. This works out pretty good because if you rolled over the 401k this year, the RMD for the increased value would not be due until 2009, and now you do not have to take one for 2009.