RMD from fiscal year based profit-sharing plan

Submitted by Roger Fine on Fri, 2014-04-04 14:35

I will be 70&1/2 on May 4, 2014 and will be taking my first RMD from my profit-sharing plan this calendar year (2014). I rolled my traditional IRA into the plan in 2013 so there will be only the plan to contend with when calculating my RMD amount. The profit-sharing plan uses a fiscal year, ending 6/30/14. Do I use the profit-sharing plan balance as of 12/31/13 or as of 6/30/14 to determine my RMD?



Submitted by Alan - IRA critic on Fri, 2014-04-04 17:53

You need to determine the 12/31/2013 value of the plan. RMDs are always based on calendar year end values.

Submitted by Roger Fine on Tue, 2014-04-08 17:04

My profit sharing plan contract administrator insists that the proper valuation date to use for my 2014 RMD is the plan year-end date of 6/30/13. She sites Treasury Reg Sec 1.401(a)(9)-5, Q&A-3(a), which she says confirms her opinion. Can you please review your previous answer that 12/31/13 should be used as the valuation date? Kindly advise.

Submitted by Roger Fine on Tue, 2014-04-08 17:11

My profit sharing plan contract administrator insists that the proper valuation date to use for my 2014 RMD is the plan year-end date of 6/30/13. She cites Treasury Reg Sec 1.401(a)(9)-5, Q&A-3(a), which she says confirms her opinion. Can you please review your previous answer that 12/31/13 should be used as the valuation date? Kindly advise.

Submitted by Alan - IRA critic on Tue, 2014-04-08 18:56

  • OK, the Reg does confirm that the plan valuation date can be used, although the plan must make adjustments to that value for contributions or distributions taken from the plan between the valuation date and the end of the year. That could mean that they will have to add your IRA rollover to the plan balance on 6/30 if they received it after 6/30. Are you a greater than 5% owner of the company?
  •  I would simply ask the administrator to provide you with the actual RMD amount for 2014 and eventually for each year thereafter and if you distribute that amount it should suffice with the IRS.  For 2014 only you can take none, part of all of that RMD in 2014 as long as the total is distributed by 4/1/2015, and then take the 2015 RMD they specify no later than 12/31/2015.

 

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