Is RMD NECESSARY?

Submitted by MICHAEL LEVIN on Tue, 2018-12-04 17:58

I am 72 years old and still working in a one-person self employed business. I opened a new SEP-IRA account (not a rollover or transfer) in March, 2018 (to gain a 2017 deduction) and thus, there was no balance on 12/31/17. Must I take a 2018 RMD? If so, how would the amount be calculated? I am looking for truly informed answers, not educated guesses. Thanks.



Submitted by Alan - IRA critic on Tue, 2018-12-04 18:41

  • RMDs are required for an account only if there is a balance on the prior 12/31, so an RMD can be effectively delayed or reduced by making contributions after the year end if allowed such as the case for a SEP IRA.  Therefore, you have no RMD requirement for 2018 for the SEP IRA. If you had made part or all of your 2017 SEP contribution in 2017, then you would have a 2018 RMD based on the 12/31/2017 balance.
  • The only exception under which a 12/31 balance that does not exist and must be restored is when there is an outstanding rollover from that account on 12/31 that is not yet rolled to another account. This does not apply in your situation.

Submitted by MICHAEL LEVIN on Wed, 2018-12-05 15:47

Thanks very much, Alan.  May I communicate with you in the future if I have another thorny question, possibly related to a client of mine?  I am a CLU and ChFC, but surprisingly do not have ALL the answers.  Again, thanks so much.  Michael Levin, South Bend, Indiana

Submitted by Alan - IRA critic on Wed, 2018-12-05 16:02

Not directly, but you can post any question here and it will be answered, just as this one was.

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