403b under distribution
Client had a 403b she rolled to us this year.
It appears her RMDs for the last several years have been about $20k less than required!
Two questions:
1 – Am I missing something re: RMD for 403b vs for IRA
2 – Will they be penalized for the under distribution if found, or is it up to the 403b and are they the ones liable for past years?
Any thoughts?
Permalink Submitted by Al Fry on Wed, 2008-12-03 20:10
How old is she? Does she have any grandfathered (pre 1987) money in the plan?
Permalink Submitted by Mobey on Wed, 2008-12-03 20:23
[quote=”[email protected]“]How old is she? Does she have any grandfathered (pre 1987) money in the plan?[/quote]
Yes, she’s 81 so she does have pre-1987 $$
Permalink Submitted by Alan Spross on Wed, 2008-12-03 22:01
If over 75, the RMD should be the same as for an IRA. Perhaps a sole spousal beneficiary more than 10 years younger is being overlooked??
From a practical standpoint, there is no RMD reporting requirement on 403b plans, no 5498, and the IRS does not know the year end FMV of accounts. For employer plans, RMD management is left to administrators who the IRS assumes are much less at risk of violating RMD rules than individual IRA owners who only deal with their own IRAs and may not understand the rules. Accordingly, unless the taxpayer is subjected to a full audit, any prior 403b RMD errors are past history.
Permalink Submitted by Mobey on Wed, 2008-12-03 22:34
[quote=”[email protected]“]If over 75, the RMD should be the same as for an IRA. Perhaps a sole spousal beneficiary more than 10 years younger is being overlooked??
From a practical standpoint, there is no RMD reporting requirement on 403b plans, no 5498, and the IRS does not know the year end FMV of accounts. For employer plans, RMD management is left to administrators who the IRS assumes are much less at risk of violating RMD rules than individual IRA owners who only deal with their own IRAs and may not understand the rules. Accordingly, unless the taxpayer is subjected to a full audit, any prior 403b RMD errors are past history.[/quote]
Thanks for the help!