required beginning distributions
I was 70 in Sept. of 2012 (Morton)
My wife will be 70 in march of 2013 (Marilyn)
We have multiple accounts: Ira, 403b (TDA), and 457.
When do we take our required minimum distribution? How do we know from which account (s) to take the distribution?
How do we know how much to withdraw for each of us?
How can we make sure that the balances in the accounts can be streched over the life time of our beneficiaries, after we die?
Thank you,
Morton Kugal
[email protected]
Permalink Submitted by Alan Spross on Mon, 2012-10-22 19:49
For your first RMD year only, you can defer the RMD until 4/1 of the year following the year you reach 70.5. That date is called the required beginning date. However, if you defer your first RMD to the following year, you will have to take 2 RMDs that year, the first by 4/1 using the year end balance for two years ago and the second by 12/31 using the year end balance of the prior year.
For example, in your case (Morton), your first RMD year is the year you reach 70.5, not 70. That will be 2013. Your first RMD will be based on your 12/31/2012 balance and can be taken as late as 4/1/2014. Your 2014 RMD will be based on your 12/31/2013 balance and must be taken by 12/31/2014. Rather than have two RMDs in your taxable income in 2014, you are probably better off to take your 2013 RMD by 12/31/2013 and limit your RMD income to one RMD per year. The same applies for your wife because she reaches 70.5 the same year you do in 2013.
Your IRA RMD must be taken from one or more of your IRAs, the 403b from the 403b and the 457 from the 457. You cannot satisfy the RMD for one type of plan by taking it from another type of plan.
The plan administrator should inform you of your RMD and year end balance for each of these plans. If you do not hear from them, contact them to ask about your RMD. I assume you are retired, but if you are still working for the sponsor of the 403b and 457, you do not have to start those RMDs until you retire.
Managing the RMDs and your investments might be easier if you rolled the 403b and 457 over to an IRA account. For the first spouse to pass, the beneficiary spousal survivor can roll over the inherited IRA to their own IRA. A non spousal beneficiary (eg a child) can take RMDs over their own life expectancy starting in the year after the last spouse’s death.
NOTE: There is a special rule for 403b accounts that your balance on 12/31/1986 is not subject to RMDs until age 75 if the plan tracks that amount. If you keep your 403b and do not roll it over to an IRA, ask the plan about your 12/31/1986 balance. It may also show up on your statements.