82 and still working
I have an 82 year old client who was still working full time and contributing to a 401(k). We just did partial rollover from the 401(k) to an IRA which created the need for a RMD. For valuation purposes, do you use the value at rollover to calculate the RMD plus her other IRA’s year end value to get this year’s total RMD value? Or am I missing something? Also on the Partial from the 401k is the RMD due to start next year or this year in which the rollover happened.
Permalink Submitted by Alan Spross on Tue, 2012-06-19 16:07
I assume the client is NOT a 5% owner and therefore there are no RMDs due from the 401k until he retires.
His 2012 IRA RMD is based on the 12/31/2011 IRA balance, and the 401k rollover will not increase that RMD for 2012. For 2013, the rollover will create a higher IRA value on 12/31/2012 and therefore the 2013 IRA RMD will be higher.
Note that if the client retires, an RMD distribution year is created for the year of retirement. For example, if she retired before the end of 2012, then there would be an RMD due for 2012 from the 401k, however it could be deferred to 4/1/2013 which is the required beginning date for the 401k plan.