IRA RMD from TSA?
I met a lady who had a 403b and when she retired it was moved to an annuity with TSA tax status. Not sure why it was not put in IRA. Anyway, she has several IRA’s and last year she aggregated all of her RMD’s for her IRA and took it from the TSA. Can she do that? If not, what does she need to do to correct the situation?
Permalink Submitted by Alan Spross on Thu, 2011-11-10 18:06
While 403b RMDs can be aggregated with other 403b accounts, and IRA RMDs can be aggregated among different IRA accounts, the 403b and IRA RMDs must be satisfied separately, ie they cannot be aggregated with each other. Therefore, she has unfortuneately failed to satisfy her 2010 IRA RMD.
The only way out of this is to take both her 2010 and 2011 RMDs from her IRAs. Then she should file a 5329 (stand alone OK) for 2010 and explain what happened, how she has corrected the shortfall, and ask the IRS to waive the penalty for “reasonable cause”. The detailed instructions for this are on p 6 of the 5329 Instructions. The IRS is almost sure to grant the penalty waiver.
The downside is that she will have taken more out of the TSA than required. If the amount is significant, she could request a PLR asking the IRS to approve an extension of the 60 day rollover period, and if approved she would be allowed to roll the excess of the 403b RMD over to her IRA. But the legal costs of a ruling request must be considered even though the IRS has reduced fees for rollover related requests.