Permalink Submitted by Alan - IRA critic on Mon, 2016-09-12 17:31
If the RMD is from a non IRA plan sponsored by the current employer, then retirement in 2016 will result in 2016 becoming an RMD distribution year. The RBD will be 4/1/2017 for this plan. If participant wants to do a rollover to an IRA this year after 12/14, the current year RMD cannot be included in the direct rollover and must be dfistributed to the participant. Further, if the participant has done a direct rollover earlier this year, the retirement will result in a portion of that rollover being deemed to be the RMD for 2016 and an excess contribution to the receiving IRA account. The excess with earnings would have to be distributed from the IRA by the usual deadline.
If the direct rollover to an IRA is planned for 2017, both the 2016 RMD and the 2017 RMD will have to be distributed prior to or at the time of the direct rollover. This will avoid any RMD income in 2016 when participant already has a full year of taxable earned income. There will be 2 years of RMDs in 2017, but in many cases this will avoid spiking taxable income in 2016 by avoiding RMD distributions in 2016.
As you can see “retirement” only affects non IRA account RMDs.
Permalink Submitted by Alan - IRA critic on Mon, 2016-09-12 17:31