MINIMAL REQUIRED DISTRIBUTION
MY HUSBAND IS 73 YEARS OLD
HE HAVE A PROFIT SHARIG KEOG PLAN, BASIC ACC, WITH MERRILL LYNCH.
TO COMPLY WITH M.R.D DISTRIBUTION 2011, HE TOOK THE M.R.D FROM THE INVESTMENT THAT WAS LESS BENEFICIAL
TO HIM . AT THE SAME TIME HE TOOK EXTRA MONEY BESIDE THE M.R.D.FROM THE SAME INVESTMENT.
TO COMPLY WITH THE REGULATIONS , HE NOW MUST CONVERT PART OF THE KEOG BASIC ACC. INTO A COMPATIBLE TRADITIONAL IRA,
QUESTIONS
1)- DOES HE HAS TO CONVERT ONLY THE AMOUNT HE TOOK TO COMPLY WITH R,M.D FROM THE 2 INVESTMENT HE HAVE —— O THE TOTAL DISTRIBUTION SINCE HE TOOK EXTRA MONEY BESIDE THE R.M.D?
2)- IS ANY BENEFIT TAX WISE TO CONVERT THE TOTAL AMOUNT HE TOOK O ONLY TO CONVERT THE AMOUNT HE NEED TO COVER THE .
M.R. D AND STILL BE IN COMPLIANCE ?
3) IS ANY BENEFIT TO CONVER THE TOTAL AMOUNT OF THIS INVESTMENT IN TO A TRADITIONAL IRA?
4)- WICH OTHER CHOICES ARE THERE TO PROTECT THIS MONEY?
THANK YOU.
Permalink Submitted by Alan Spross on Tue, 2012-04-24 17:38
There is no problem in distributing more than the RMD other than having to pay taxes on the total distribution. If his last distribution was less than 60 days ago he can roll that amount to an IRA to avoid taxation for amounts greater than the RMD.
The first distribution is deemed to apply to the RMD, and RMD amounts cannot be rolled over. Only the additional amounts can be rolled over if done within the 60 day time limit.
Permalink Submitted by Cecilia Abonia on Wed, 2012-04-25 14:42
QUESTIONS
ON 11/18/20/ 11 , MY HUSBAND TOOK THE RMD PLUSS EXTRA MONEY AT THE SAME TIME. HE WAS INFORM THAT HE HAVE 7 MONTHS TO MAKE THE CONVERSION TO A TRADITIONAL IRA.
1)-Q- SINCE IT WAS A TOTAL AMOUNT STIL HE HAS TO PAY THE TAX EVEN IF HE HAVE 7 MONTHS TO MAKE THE THE CONVERSION ACCORDING WITH THE INFORMATION HE HAVE AT THE TIME , STILL HE MUST PAY THE TAX FOR THE DIFFERENCE?
THANK YOU.
Permalink Submitted by Alan Spross on Wed, 2012-04-25 20:49
The information with respect to 7 months is incorrect. I don’t know where anyone could have come up with that period of time.
FIrst off, a conversion only refers to taking funds from a traditional IRA and rolling them over to a Roth IRA. What you are describing is just a rollover from a qualified plan to a traditional IRA.
The RMD from the plan is not eligible for rollover of any kind, but the extra money could have been rolled over to a traditional IRA, but only within 60 days from the date he received the money. Those 60 days would have ended about 1/17/2012. If the additional amount had been rolled over in time, it would not be taxable and only the RMD amount would have been taxed.
In some cases the IRS will extend the 60 days and still permit the rollover to be done, but applying for a ruling is expensive and not practical unless the amount is large enough to justify the expense and he had a good reason (eg health problems) for missing the deadline. If any of this money was used for any purpose, then the IRS is not likely to approve an extension of the 60 days.