Still Working Exception
I have a client who retired this year at age 74 (!). He has a 401k that has now been rolled into an IRA. I understand that the RMD must be taken by 4/1/2013.
My question is, exactly how do I calculate that RMD? Do I use the 12/31/2011 balance of the 401k?
Michael
Permalink Submitted by Alan Spross on Thu, 2012-09-13 18:29
Yes, the 12/31/2011 401k balance is used to calculate the 2012 plan RMD.
The RMD has already been distributed, as it was included in the rollover. The amount of the RMD is now an excess contribution to the IRA and must be removed from the IRA with any earnings generated on the contribution of the RMD to the IRA. The 4/1/2013 date becomes moot because of the rollover.
That RMD should be included on line 16b income as well as the interest earned on the excess contribution. Since the RMD will be taxed, it is not taxed again when removed from the IRA.
The plan administrator should have known to withhold the RMD from the rollover unless the rollover was allowed before retirement occurred.