RMD Question

Submitted by Don Chamberlin on Mon, 2008-12-15 16:24

I am dealing with a situation in which I have a potential client who turned 70 in August of 2007. That puts him at 70 1/2 at February of 2008. I am wondering if he has to take an RMD in 2008?

If he does not have to take an RMD in 2008 and elects not to take one, how many RMDs will he be required to take in 2009?

Thanks for the help.

-D.C.

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Permalink Submitted by Jose Morales on Mon, 2008-12-15 16:58

He can take a distribution by Decebmer 31st of this year to fulfill his 2008 RMD. However, his Required Beginning Date is not until April 1st of 2009. If he choses to delay his first distribution until anytime in 2009 between January 1st and April 1st then he will also have to take a second distribution to fulfill his 2009 mandatory distribution requirement by December 31st of 2009.

Permalink Submitted by Jose Morales on Mon, 2008-12-15 17:24

It appears that may be so, if indeed the House and Senate passed a bill waiving the 2009 Mandatory Distribution requirements.

Permalink Submitted by Don Chamberlin on Mon, 2008-12-15 18:48

I just read up on that new law and it appears that he will have to take his 2008 RMD by April 15th. However, he will not be required to take his 2009 RMD. This is a nice benefit because it allows for someone who is 70 1/2 to ease into RMDs with only one required in a year when he should be required to take two.

Permalink Submitted by Alan Spross on Mon, 2008-12-15 18:52

That’s right. While the bill is not official yet, Bush is almost certain to sign it in the next few days, maybe this week.

Permalink Submitted by Marcia Brill on Thu, 2008-12-18 21:57

Alan,

Can you make your answer a little clearer. If I transfer the funds to a brokerage account there is no tax???. I am confused and I don’t have much time to act on this. Thanks. These funds have never been good, therefore I don’t expect them to do well.

Permalink Submitted by Alan Spross on Thu, 2008-12-18 22:02

Are you the original poster or did you post to the correct thread?

I am not sure what you are asking. Could you clarify further? A brokerage account can be either an IRA or a taxable account.

Permalink Submitted by Alan Spross on Thu, 2008-12-18 22:04

OK, I found your original post and will reply to that one.

Permalink Submitted by Al Fry on Fri, 2008-12-19 16:26

April 15th? I believe he meant April 1st.