RMDs when last year end balance was ZERO
I had no IRA as of Dec 31, 2010. March 4, 2011, I turned 70 years old, so I will be 70 1/2 in 2011. During 2011, I retired and rolled over my 457 deferred compensation plan to an IRA. I do NOT want to take two RMDs in 2012. How do I calculate my RMD for 2011? Do I even have to take a RMD in 2011?
Thanks!
Permalink Submitted by Alan Spross on Mon, 2011-02-28 19:44
If you rolled over the 457 after you retired, the plan should have held the 2011 RMD out of the rollover, because 2011 became an RMD distribution year for the 457 when you retired in 2011.
If that was not done, then your 457 RMD was STILL considered made, but as such it is not eligible for rollover to an IRA. This creates an excess contribution to your IRA in the amount that comprised your 2011 plan RMD. The amount of the RMD will be taxable on line 16b of your 2011 1040, and any earnings distributed from the IRA when the excess contribution is corrected will be taxable in line 15b of Form 1040.
You will not have a 2011 RMD for the IRA itself, just for the 457. You will only have an excess contribution correction from the IRA, and only the earnings will be taxable. In 2012 you will have a regular IRA RMD based on the 12/31/2011 account balance and an age of 71.
Permalink Submitted by Shirley Hall on Wed, 2011-05-11 23:31
This is one I pretty much agree with as I too have a 457 acct which I am not rolling over and if I did I would nave to take an RMD based on the full amount I had in the acct as of 12/31/10 for the 2011 tax year as I retired as of 3/15/11. However I also have a pension fund which I am trying to determine the amount of the RMD I need to take from the pension fund when rolling over 50% of the fund to an IRA. There will be no RMD taken from the new account until the end of 2012 for the RMD based on the balance as of the end of the year because the RMD had already been taken for 2011 from my previous Employer Acct.
The balance on the new acct is actually zero as the rollover has not yet occurred.
Shirley
Permalink Submitted by Alan Spross on Thu, 2011-05-12 00:16
Since you retired in 2011, you do not have to take the 2011 RMD until 4/1/2012. However, if you wait until 2012 to take your 2011 RMD, then you will have 2 RMDs in 2012, the delayed 2011 RMD and the 2012 RMD, which must come out by 12/31/2012.
Either way, your 2011 RMD will be based on the plan balance on 12/31/2010, regardless of whether you take it this year or in 2012. The 2012 RMD will be based on the balance on 12/31/2011. So if you take your 2011 RMD this year, your 12/31/2011 balance will be somewhat lower and your 2012 RMD will also be lower because it is based on the 12/2011 year end balance.
Whether you roll this plan over to an IRA or not, the 2011 RMD is the same. But if you do the IRA rollover, the RMD must come out sooner, ie at the time you do that rollover. But in the long run, things will be much simpler for you if you get all these plans into traditional IRAs, or perhaps convert some to Roth IRAs. Roth IRAs do NOT have RMDs, but you have to pay taxes on the conversions.