403b rollover – RMD
403(b) participant, 72, still working for the employer sponsoring the 403(b) did a partial IRA rollover earlier in 2016
He did not take a 403(b) RMD prior to the rollover (to the IRA)
I was under the impression he needed to take his 2016 RMD prior to the IRA rollover – 403(b) provider said the opposite – since he was still working an RMD was not required. Although the provider’s comment is true – my understanding is an RMD is required in this situation -prior to the rollover
Since the RMD was not taken – the IRA now has an excess contribution (in the amount of the RMD)
Is my logic sound?
All help is appreciated.
Thank you
Permalink Submitted by Alan - IRA critic on Mon, 2016-10-24 20:57
The provider is correct. There is no RMD for 2016 as long as participant is still working at the end of the year. If participant retires before year end then 2016 would become an RMD distribution year and the IRA rollover would include some RMD money resulting in an excess IRA contribution. But as long as participant continues to work, there is no RMD and therefore IRA rollovers do not include RMD funds. Participant will eventually retire and if he did an IRA rollover earlier in that same year then there would be an excess IRA Contribution to remove.
Permalink Submitted by gerard noronha on Mon, 2016-10-24 22:20
for alan…thanks in advance….turning 70 1/2 april 2017…..can I take my first rmd between jan and april 2017…gerry
Permalink Submitted by gerard noronha on Mon, 2016-10-24 22:22
sorry …hit the wrong key
Permalink Submitted by Alan - IRA critic on Mon, 2016-10-24 23:04
gerry – yes, the first distribution you take in an RMD year is considered to apply to the RMD.