Traditional IRA Distribution in 2010
How is a traditional IRA distribution (not a required minimum distribution in this case) taken this year taxed? Is it all taxed this year or can it be split between 2011 and 2012? I know that one individual cannot have two distributions handled separately.
Question came up at dinner with friends this evening. She (age 70 later this year) is taking a distribution from her traditional IRA now. Another distribution from a traditional IRA (not sure if from hers or his) might be taken later this year. He is 69 later this year.
I guess what I am thinking is any distribution (not necessarily an RMD) taken this year by one person must be taxed the same way (i.e., either all in 2010 or all split between 2011 and 2012). If she and he were to take a distribution they each could select different taxing methods.
Tom D.
Permalink Submitted by Alan Spross on Fri, 2010-07-09 02:46
Tom,
All TIRA distributions are taxable in the year distributed, with the exception of 2010 Roth IRA conversions.
Therefore, it does not matter whether the distribution is an RMD or a non-RMD distribution, as these are all taxable in the year distributed. If both spouses convert to a Roth IRA in addition to these other distributions, they can make different elections regarding taxation of the conversions only, with one deferring to 2011 and 2012 and the other opting out and reporting the conversion in 2010.
Permalink Submitted by tomd37 on Fri, 2010-07-09 03:21
So, it is only conversions to a Roth where the year of taxation of the distribution comes into play. My thinking cap (or dunce cap) was not on straight tonight. 😳 Thanks for straightening me and it out Alan.
Tom D.