pension rollover & RMD
Sue is 76 years old and retired in June 2024. She rolled over her pension lump sum to her IRA in July. Does that need to be included in her RMD calculation for her 2024 RMD? Since it was still in the pension on 12/31/2023, there was no 5498 showing that balance. Thank You.
Permalink Submitted by Alan - IRA critic on Tue, 2024-09-17 15:23
Only IRA accounts produce a 5498, pensions do not. Her retirement resulted in 2024 being an RMD distribution year, and the RMD must be completed prior to the rollover. If it was not, the portion of the rollover that was the RMD satisfies the RMD and must be reported as taxable even if the 1099R shows a non taxable direct rollover. Then, the amount of that RMD that must be reported as a taxable distribution is also an excess contribution to the IRA, which must be corrected as a regular IRA excess contribution. This mistake is not very costly but is a hassle to report and correct.
Note that if she was eligible to make an IRA contribution that was not made and also did not make a Roth IRA contribution, up to 8000 of the excess contribution would not be excess, but since a deductible IRA contribution made after 70 will compromise any future QCDs, it is probably best to remove the entire amount of the pension RMD from the IRA as an excess contribution.