RMD Question

Hello, I have a client that is 72 and took their RMD from their traditional IRA for 2018. The took $ 500 more than the RMD amount. They now want to return the excess RMD amount back to the traditional IRA. Can you do a 60 day rollover for the excess amount? Thank you.



The excess $500 can be rolled back as long as the one rollover limit over a 12 month period is not violated. Even if the roll back is allowed, it will block additional rollovers for the next 12 months. Therefore, the client must weigh the loss of future rollover flexibility  for any amount against the small amount of this $500 distribution.

The $500 could instead be converted to Roth by rolling it over to a Roth IRA, avoiding involvement of the one rollover per 12 months limit and where subsequent gains will be tax free instead of only tax deferred if the 5-year qualification period has been met.

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