RMD year
I have a question from a CPA I need to answer. He has a client who has to take the first year and second year RMD out in 2009, the 2008 being due by April 15th of 2009. His question to me was if the account balance on the 2008 RMD had to be based on the Dec 31 value of 2007 or if he could base it on the next year’s value. I believe the answer is yes, it has to be based on the Dec 31, 2007 value, but I am seeking confirmation. Many thanks.
Permalink Submitted by Alan Spross on Fri, 2008-12-05 04:32
You are correct. The 2008 RMD is figured using the 12/31/07 account value. Also, note that the required beginning date is 4/1/09, not 4/15 if 2008 was the first distribution year.
If the 2008 RMD is delayed to 2009, there is no longer an adjustment made to the 12/31/08 value to determine the 2009 RMD. The actual existing balance on 12/31/08 is applied. Obviously, it will be around 4% higher than if the 2008 RMD was not deferrred until 2009.
It may also be wise to stay tuned for any RMD relief as part of Congress’ next stimulus plan. While it is unlikely to affect 2008 RMDs, it may well eliminate the 2009 RMD. Therefore it may be wise to defer the 2009 RMD well into the year. There may also be a possiblity that the 08 RMD might get relief it the required beginning date is in 09, but that one is a real long shot.
Permalink Submitted by Michael Lynch on Fri, 2008-12-05 12:20
thank you. i appreciate the help.