RMDs

Submitted by Anthony Zalesky on Tue, 2018-02-27 21:19

Client turned 70 on 1/5/2018 and has 3 IRAs and a past employer’s 403B plan. We are in the midst of transferring the 403B to a personal IRA. Must a distribution for RMDs for 2018 be made from the 403B prior to transferring the assets to the IRA



Submitted by Alan - IRA critic on Tue, 2018-02-27 21:39

Yes, the 2018 403b RMD must be distributed and not included in the direct rollover to an IRA.

Submitted by Anthony Zalesky on Tue, 2018-02-27 23:08

Even though her first RMD doesn’t have to come out until April 2019?

Submitted by Anthony Zalesky on Tue, 2018-02-27 21:58

Even though her first RMD doesn’t have to come out until April 2019?

Submitted by Alan - IRA critic on Tue, 2018-02-27 23:11

  • Yes. The reason is that the 403b rollover is considered a distribution. The first distribution in an RMD distribution year is deemed to be the RMD and is not rollover eligible. 
  • If client wants to defer her first RMD to 2019, then the IRA rollover has to wait until Jan, 2019. She won’t have any taxable distribution in 2018. However, in 2019 she would need to have both her 2018 and 2019 RMDs withheld from the rollover. This would move taxable income from 2018 to 2019.

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