403b calculated for rmd on 70 1/2 & 71 in 2012

Submitted by Douglas Bauerband on Tue, 2012-12-18 17:01

have client who retired this year and turned 70 1/2 and 71 in 2012.

He has two ira’s which i have 2011 yr end values for his rmd calculation which he can take by 4-1-13.

Question:
a. do i include his 403b yr end value in 2012 in this years rmd calculation?

or

b. cAn he wait to take his rmd from his 403b until 75?

Thank you,
Douglas



Submitted by Alan - IRA critic on Tue, 2012-12-18 17:53

  • a) His 12/31/2011 403b value will be used for his 2012 403b RMD only. It is not combined with his IRA RMD in any way, which must be separate and based on IRA 12/31/2011 values. For both the 403b and IRA, he can defer any portion of his 2012 RMD to 4/1/2013. He does not have to make the same deferral decision for the IRAs as he does for the 403b.

 

  • b) For the 403b, he can only defer the RMD on his balance as of 12/31/1986, as long as the plan statement shows that balance. The rest of the current balance must start this year or next year.

Submitted by Douglas Bauerband on Tue, 2012-12-18 18:55

a. what if his 403b is rolled over to an IRA before the end of year…will his 403b then be considered part of his IRA?b. what do you mean it can’t be together with IRA…doesn’t the 403b and IRA rmd factors come off the same uniform lifetime table?

Submitted by Alan - IRA critic on Tue, 2012-12-18 19:31

If the 403b is rolled over this year, the 403b RMD must be distributed from the plan and not included in the rollover. The IRA balance on 12/31/2012 will then be increased for purposes of the 2013 RMD. While the 403b and IRA RMDs use the same table, you cannot satisfy the 403b RMD from the IRA or vice versa. Of course, if the 403b is rolled over everything will be in IRA accounts, and there will also be no age 75 beginning date for the 403b 1986 balance.

Submitted by Douglas Bauerband on Tue, 2012-12-18 19:41

what if the plan rolls over the whole amount from the 403b to IRA with out sending him his rmd distributiion?Are they required to do by law and what do we do if they forget?

Submitted by Alan - IRA critic on Tue, 2012-12-18 21:57

This happens fairly often, and sometimes the employee is still working when the rollover is done, but retiring before the end of the year creates an RMD year after the rollover was done. In this case, the amount of the 403b RMD should be reported on line 16b as income, and removed from the IRA as an excess IRA contribution because an RMD is not eligible to be rolled over.

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