Rmd

Submitted by Brian Tabachnick on Mon, 2014-02-10 23:08

An individual owns an IRA variable annuity and is required to take an RMD because he is currently age75. He contacts the insurance company on December 31,2013 and request the distribution.The trade is executed the same day and the check is sent out the next business day. In which year is the income considered to be taxable, 2013 or 2014 and why?



Submitted by Alan - IRA critic on Tue, 2014-02-11 00:09

  • I don’t know whether IRA custodians determine the date paid by when the IRA is debited or by the date on the check or even some other occurrence in the processing chain. Whatever is the trigger point will determine the paid date and therefore the 1099R date. Of course, no one who has an RMD due should order it after Christmas and expect that it will be processed in time. For an RMD you want the earlier taxable year rather than a potential excess accumulation penalty. So if the 1099R for 2013 includes the RMD individual is in luck even though taxes are due a year earlier. If the 1099R does not arrive, that will mean two taxable RMDs in 2014, although individual can probably secure a penalty waiver by filing for Form 5329 and explaining why the 2013 RMD was not taken in time.
  • One of the regular posters here works for a bank. Perhaps they can be more specific what the exact trigger point here is for the 1099R, or at least how their bank does it. Of course, in this individual’s case, an insurer is the issuer.


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