RMD and PSP rollover to IRA
Taxpayer is 77 years old is still currently working. Planning to retire 12/31/16. Taxpayer completed a IRA rollover from her employer PSP in Oct 2016. Taxpayer was not required to take an RMD in 2015 since he did not have an IRA. Since PSP was rolled over to an IRA this year, what is RMD requirement and how is it calculated? Is this considered a disallowed rollover which creates an excess IRA contribution? If so, is this amount calculated as any other RMD based on the employer PSP balance at 2015?
Permalink Submitted by Alan - IRA critic on Mon, 2016-11-21 19:17
If his retirement is effective in 2016, some of his PSP rollover will be considered PSP plan RMD money and to that extent an excess regular IRA contribution that must be corrected. If he could make his retirement effective in January, then this would not be a problem and he would also have less income in 2016 to be taxed. The amount of the PSP balance on 12/31/2015 is used to determine the plan RMD for 2016 based on his age as of 12/31/2016.
Permalink Submitted by Marina Ferrone on Mon, 2016-11-21 20:27
Thank you!