Creating “spot” IRA for RMD purposes

Submitted by Robert Vashko on Wed, 2018-01-31 16:58

Client has a single 403(b) and a single IRA. The first RMD for the IRA is due on 4/1/18. Assume that the RMD for the 403(b) has been satisfied, or RMD is not required because client is still working.

Client does not want to take the IRA RMD from their existing IRA account (it holds an annuity with liquidity issues). Can client roll over an amount sufficient to cover the RMD from the 403(b) into a *new* IRA today, and take the RMD from that new account on 4/1/18?

It’s really not “aggregation”, because the new IRA account did not exist on 12/31/17, thus having no year-end value and having no RMD due 4/1/18 on itself.

Basically, is there anything preventing the creation of a “spot” IRA like this for RMD withdrawal purposes, so that the original IRA can be left intact?



Submitted by Alan - IRA critic on Wed, 2018-01-31 19:49

No problem in doing this. Under the IRA RMD aggregation rules, any IRA account can be used to fund an RMD whether that particular IRA had an RMD due for the year or not. 

Submitted by Robert Vashko on Thu, 2018-02-01 00:32

I could not think of a reason this would not work, but was worried there was an esoteric spin on the rules where newly-created IRAs couldn’t be used to aggregate RMDs.  Thanks.

Add new comment

Log in or register to post comments