Distribution from a Def Comp Plan
I have a client who had requested to do a rollover from her State Def Comp plan to her local bank. Upon receipt – she got one check for the value of her Def Comp plan minus what appears to be an income check for a much smaller amount with 10% Federal Taxes withheld.
The client is turning 70 years old this year and claims that she never requested a distribution, just the rollover – is this a mandatory RMD Distribution because of her age?
Thank you in advance for your help!
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 01:41
Probably is an RMD. The RMD is required to be withheld from the rollover IF she will reach 70.5 (not 70 even) this year because this would then be an RMD distribution year. The fact that her RBD would not be until next year does not change this. The first RMD would be somewhat less than 4% of the 12/31/08 balance, so this would be another clue as to what this was intended to be.
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 01:46
Forgot that 2009 RMDs have been waived.
Many of these plans have not changed their systems to override the issue of one time or periodic RMD payments. Therefore, I still suspect that this was intended to be an RMD, but she should confirm that will the plan administrator. If this was a 2009 RMD, she can roll it over within 60 days to her IRA because it technically is NOT an RMD pursuant to the WRERA signed by Bush on 12/23/08.
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 18:56
Alan S –
Thank you so much for taking time out to reply. This was a great help!
With Aloha,
Karey