timing of taxation on first IRA distribution
Client is 72. He has continued to work and has 401k, 403b. He will stop working in 2015.
He plans to take his first distribution in 2016.
Will that amount be taxable as 2015 or 2016 income?
Thanks, Leslie
Client is 72. He has continued to work and has 401k, 403b. He will stop working in 2015.
He plans to take his first distribution in 2016.
Will that amount be taxable as 2015 or 2016 income?
Thanks, Leslie
Permalink Submitted by Alan - IRA critic on Sat, 2014-07-12 18:01
2016. Distributions are always taxable in the year distributed, so deferring the first year RMD will result in two RMDs being taxable in the second year.
Permalink Submitted by David Mertz on Sun, 2014-07-13 14:15
The Required Beginning Date for distributions from a traditional IRA would have been April 1 of the year following the year in which the client reached age 70 1/2, so the client should have already received at least the first distribution from the IRA (and probably two RMDs unless the client just reached age 72 within the last few weeks). Also, unless the client is currently working two jobs, one with the 401(k) plan and the other with the 403(b) plan, it seems that one of these plans is also already subject to RMDs.