RMD before 70 1/2
I will be turning 70 before years end. I also will be purchasing a new car in 2010. My question is: Can a RMD be taken before 70 1/2. I am thinking taking some in 2010 and the rest in 2011 would make sense for tax purposes. Am I correct?
Permalink Submitted by tomd37 on Sat, 2010-11-13 19:32
A required minimum distribution (RMD) only occurs after you reach age 70.5, however that does not preclude you from taking a regular distribution from your IRA at any time you wish.
You indicate you will attain age 70 prior to December 31, 2010 so you will attain 70.5 in 2011 and therefore have to take your first RMD by April 1, 2012. You probably should take the first RMD in 2011 so that you do not end up having two RMDs in 2012 and possibly affecting the taxability of your SS benefit.
Whatever amount you take out as a distribution before this year-end will be reported to you on Form 1099R and will be taxable income to you on your 2010 tax return.
Tom D.
Permalink Submitted by Alan Spross on Sat, 2010-11-13 19:54
Tom is correct, although the first sentence should be amended to show that the first RMD occurs with the first distribution taken IN THE YEAR you turn 70.5. Accordingly, if you can just wait 7 more weeks to purchase the car, your IRA distribution in Jan, 2011 will be credited toward your first RMD distribution year. If you can’t wait, perhaps you can work a deal to make a down payment now with the balance due in January.