Excess RMD
The administrator of a 401k plan inadvertently sent a duplicate payment in March 2013 for a 2012 required minimum distribution that was already satisfied in 2012. Can the recipient of said duplicate payment do an IRA rollover within 60 days of receiving that payment? For the record, and in an effort to be as clear as possible, the recipient had until 4/1/13 to satisfy the 2012 rmd since this was the first rmd that recipient had to take after turning 70.5. Nevertheless the recipient satisfied the rmd in 2012.
Permalink Submitted by Alan - IRA critic on Mon, 2013-04-15 00:24
Distributions taken in 2013 are considered 2013 RMDs if the 2012 RMD has already been satisfied. Therefore, the 2013 distribution cannot be rolled over except for any portion that exceeds the 2013 RMD. It might be a good year to roll over the plan to an IRA since the bulk of the 2013 RMD has already been satisfied. If the recent check has not been cashed and the plan is willing to accept it back, that is another option, however the 2013 plan RMD must be taken by the end of this year in any event.
Permalink Submitted by Mel Langer on Mon, 2013-04-15 04:17
As always, your input and advice are very much appreciated. Thanks.
Permalink Submitted by Mel Langer on Tue, 2013-04-16 19:54
On the portion that exceeds the 2013 RMD…..let’s say for simplicity purposes, that amount is $5000. If the company sent a check for $4000, net, withholding $1000 for Federal taxes…can I rollover the entire $5000, although net proceeds were only $4000?
Permalink Submitted by Alan - IRA critic on Tue, 2013-04-16 20:25
Yes, the amount that exceeds the 2013 RMD can be rolled over within 60 days. If the excess is 5,000, the withholding of 1,000 can replaced by his other funds to complete a 5,000 rollover.