403(b) rollover and IRA RMD Question
Good Morning—
Assistance with the following fact pattern is appreciated
An individual, >70.5 (working part time as a substitue teacher) rolled her entire 403(b) account into an T-IRA in 2013.The rollover commenced late December and was completed in early 2013.
She did not take a 403(b) RMD prior to facilitating the IRA rollover
Total IRA value on 12/31/2012 = $0
Questions
Did she need to take an 2012 403(b)RMD (based on 12/31/2011 account value) prior to the rollover?
Does she need to take a 2012 IRA RMD? My confusion surrounds her IRA value being $0 (a/o 12/31/2012) but a rollover (to the IRA) crossing over calendar years.
Thank you,
Brian
Permalink Submitted by Alan - IRA critic on Thu, 2013-01-17 17:00
Brian,This puzzle starts with her status with respect to the employer, ie has her part time work produced enough hours according to how the plan measures this, to meet the still working exception? If not, her plan RMDs could have been required for 2012 and even prior to that. She needs to get clarity from the plan to determine that. If she needed to take a 2012 RMD, then the distribution included the RMD, and the rollover to the IRA becomes an excess contribution to the extent of the RMD. She must wait to determine if a 1099R is issued for 2012. If so, this will affect her 2012 return, otherwise it will be dealt with in 2013. Per p 32 of Pub 590, an outstanding rollover that is NOT in any account as of 12/31, the (12/31) IRA account balance should be increased by the amount received by the IRA. That will result in an IRA RMD for 2013, but her status with the employer will affect the 2012 RMD or perhaps even prior years.