RMD Question
Client has a DOB of 6/3/1943
His 70 1/2 birthday would be 12/3/2013
Need to clarify please if I may …
His first year RMD may be taken either this year (2013) or he may elect to defer until next year (as long is it is taken prior to April 1st) ?? And if he defers, he would be required to take 2 RMD within 2014 then ?? The first year RMD (2013) is based off the 2012 Fair Market Value and the second one (2014) is based off his 2013 Fair Market Value ??
Thanks –
Permalink Submitted by Jose Morales on Mon, 2013-11-18 16:52
You are correct
Permalink Submitted by Alan - IRA critic on Mon, 2013-11-18 17:00
Greg, you are correct. Note that the first year RMD can also be split between 2013 and 2014 with amounts that could produce a total tax savings, usually due to reducing SS taxation in the first year by taking some of the 2013 RMD, but not all. Taxpayer may also have other expected taxable income reductions in the second year such that deferring more from 2013 would be beneficial. Note that to the extent the 2013 RMD is deferred to 2014, the 2014 RMD will be slightly higher because the 12/31/2013 value will be higher if the 2013 RMD is not fully completed in 2013. Since these RMDs run about 3.7% of the value so the 2014 RMD could be increased up to 3.7%. The only way to determine the best combination is to use tax software to enter different combinations IRA distributions. This on line calculator works well for those with fairly simple tax situations: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/