IRA – RMD for those taking 3/31/2020 & 12/31/2020 OLD RULES – Pre Secure Act

Submitted by Steven Davis on Thu, 2020-01-23 17:31

Publication 590-B (Not updated for 2019 – this is from pub used for preparing 2018 tax returns)
Distributions from Individual Retirement arrangement (IRA’s) is not clear with their example of a person who waited till 3/31/2020 for RMD # 1

QUESTION comes to the beginning balance of the IRA.

I interpret that for this process of TWO distinct calculations IN 2020 (the before 3/31/2020 distribution (Individuals # 1) & then before 12/31/2020 distribution (Individuals # 2) that the balanced used is 12/31/2019 for BOTH calculations/distributions.
Abandoning the 12/31/2018 balance.

What is explained is……..

For the topic being RBD (Required Beginning Date) allowing up to 3/31/2020 for distribution # 1, AND that distribution # 2 must be done by 12/31/2020. Both happen in 2020 and the individual for waiting into 2020 has to pick up 2 distributions in this year. One only there after.

Also when reading page 7, Chapter 1 – Distributions – the publication is clear that in this scenario the December 31 balance will NOT be adjusted by a distribution IN THE CURRENT YEAR, as a current year distribution (3/31 for distribution # 1) will only effect the year end balance for the next year calculation of distribution # 3.

From these facts, THE 12/31/2019 balance is used in BOTH calculations – as you cannot deduct the 3/31 (in year distribution).
Also the age of the individual does not change, so the same factor from the appropriate table is used.
The results lead me to believe with the same beginning balance, and same factor that in this event that the math will play out to the SAME distribution for 3/31 and 12/31.

Essentially twin distributions!!

What I believe is NOT allowed is the balance of 12/31/2018 (that was moved away from) cannot be used, and for age matters the individual in the 3/31 calculation will be ONE year older in the tables.

Am I not reading the publication guideline correctly?
Can anyone see a step that is omitted?



Submitted by David Mertz on Thu, 2020-01-23 17:46

The RMD for 2019 is based on the 12/31/2018 balance even if the distribution is taken in early 2020 (or later).  Nothing in Pub 590-B or in the tax code says that the date of the distribution has any bearing on the calculation of the RMD (and indeed it doesn’t).  The 2019 RMD amount is always based on the 12/31/2018 balance (only adjusted for any outstanding 2018 rollovers and recharacterizations that were not completed before the end of 2018).  Nothing in the SECURE Act changed this.

Submitted by Michael Romero on Mon, 2020-01-27 17:39

If an individaul who has opted to finalized their first year (RMD was calculated on 12-31-18) distributon on 3-31-2020, will any distributions taken in 2019 count towards their 3-31-20 final distribution? 

Submitted by Alan - IRA critic on Mon, 2020-01-27 18:29

Yes, 2019 is the first RMD distribution year. All distributions taken in 2019 are applied toward the 2019 RMD. Therefore, if only part of the 2019 RMD is distributed in 2019, the remainder must be distributed by 4/1/2020. And the 2020 RMD must be distributed by 12/31/2020.

Submitted by Alan - IRA critic on Thu, 2020-01-23 17:50

  • The same year end balance is never used for RMDs for different years. If an individual’s first RMD year is 2019, the 2019 RMD is calculated from the 12/31/2018 balance and age regardless of whether all or part of it is deferred to 4/1/2020 or not. The 2020 RMD is calculated by using the 12/31/2019 balance and age. At one time there was an adjustment made to the balance if the RMD was deferred, but that ended in 2002. There is no longer any adjustment made to the actual year end balances. You are correct that if an individual defers the first RMD to the second year, there must be two RMDs distributed and both are taxable in the year they are received. The 1099R form will simply add them together. But they are calculated using two different year end balances and ages.
  • There is no 3/31 calculation. All RMD calculations use year end balances. 4/1 is the required beginning date (RBD), the deadline for completing the RMD for the first RMD year, but there is no calculation using a balance on that date.

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