RMD – 70 1/2
Facts:
Client turns age 70 in September 2010
Client turns age 70 ½ in March 2011
Uniform Distribution Table
AGE YEAR FMV YEAR (NUMERATOR) DIVISOR DIST.DATE
70 2010 N/A N/A N/A
70 ½ 2011 12/31/09 OR 12/31/10 ? 27.4 3/31/12
71 2011 12/31/10 ? 26.5 ? 12/31/11 ?
72 2012 12/31/11 25.6 12/31/12
Questions:
First RMD must be withdrawn by April 1, 2012, correct?
Assuming the client waits until 2012 to take the first RMD, what happens to the RMD for age 71? It appears that the client would bypass the age 71 distribution and factor.
Permalink Submitted by Edward Czapor on Fri, 2010-02-05 18:33
No the RMD for age 71 is not bypassed if client waits to 4/1/12. This is still the 2011 RMD that is only delayed to the following year and calculated with the age 71 factor and 12/31/10 balance. The RMD for 2012 will still have to be taken resulting in two RMDs in the same tax year, 2012.
Permalink Submitted by Robert Warner on Mon, 2010-02-08 20:30
So the age 70 (factor 27.4) is bypassed and you then end up with two options:
1. Complete the age 71 rmd (factor 26.5 based on 12/31/10 balance) in 2011 and Complete the age 72 rmd (factor 25.6 based on 12/31/11 balance) in 2012
or
2. Complete the age 71 rmd in 2012 (prior to 4/1/12) and complete the age 72 rmd prior to 12/31/12
Correct?
Permalink Submitted by Edward Czapor on Mon, 2010-02-08 22:51
That is correct, you always use the factor for your age on 12/31 of the RMD year. Anyone born in the 2nd half of the year, between 7/1 and 12/31 will bypass the age 70 factor and start with the age 71 factor because they will be age 71 on 12/31 in the year they turn 701/2.