Client turning 73 in 2024
Hello,
A client is turning 73 this year in July and the question is would they need to satisfy their RMD this year or would they be able delay it until 04/01/2025. Our custodian normally will calculate the RMD amount annually but since this client was 72 on 12/31/2023 no RMD amount was calculated. If the client wants to take their RMD in 2024 I could just manually calculate it.
Any thoughts would be greatly appreciated. Thank you.
Permalink Submitted by David Mertz on Fri, 2024-02-23 16:08
Any part of this RMD can be delayed until April 1, 2025.
RMDs are calculated with respect to a particular calendar year, in this case 2024. If this is an IRA RMD, the IRA custodian was required to either provide the participant with the calculated RMD amount for 2024 or offer to provide it upon request, even though the RMD for 2024 can be delayed until 2025. See “RMDs” in the instructions for Form 5498.
Even if the RMD is for a qualified retirement plan rather than an IRA where Form 5498 is not involved, the plan needs to know the amount of the RMD for a particular year in case the participant wants to do a rollover from the plan, so there is no reason that they should not be obligated to calculate and provide the amount.
In the case of an IRA, it’s ultimately the participant’s responsibility to ensure that RMDs are satisfied timely. In the case of a qualified retirement plan, it’s a joint responsibility since failure to complete an RMD from the plan can impact both the participant and the plan.
Permalink Submitted by Alan - IRA critic on Fri, 2024-02-23 16:08
It should be easy enough to calculate the 2024 RMD, then decide whether to defer all or part of it to 2025 or not. Note that the first distribution in an RMD is applied to the RMD and not eligible for rollover, so no conversion can be done or any 60 day rollover until the RMD is completed.