Timing of RMD with rollover from 403(b) to IRA
Sir/Madam,
My client was born in July 1940 so he turned 70 1/2 in Jan 2011 and his required beginning date is 4-1-2012.
In Jan, Feb, and Mar of 2011 he completed a series of in-service rollovers from his current employer’s 403(b) plan into IRA accounts. Thus, he had no 12-31-2010 balance in these IRAs. Is he required to take a RMD anyway for 2011?
He has decided to continue working and so I’m clear that this could allow him to postpone the RMD from his remaining 403(b) balance until after he fully retires. I’m clear that this exception will not prevent him from needing to take a RMD from his IRAs this year based on their 12-31-2011 balance. I’m unclear about the RMD for 2011.
Your advice & expertise is much appreciated.
Permalink Submitted by Alan Spross on Mon, 2012-02-27 22:47
Since he had no 12/31/2010 IRA balance, there is no 2011 RMD due from his IRAs.
In addition, since he has continued to work throughout this period, the rollovers done in 2011 from the 403b are not considered to include any RMD money improperly added to the IRA. HIs 2012 IRA RMD will be based on the 12/31/2011 IRA balance. There will be no April RBD in this case and the 2012 RMD must be taken by 12/31/2012.
Eventually, for the year he finally separates from service, that year will be a plan RMD distribution year. That RMD should be withheld from any IRA rollover done in that year. If the rollover is postponed, the plan RMD will be less if he has pre 1987 accruals in the plan. The 12/31/1986 balance is not subject to RMDs until age 75.