RMDs from TSA
Client age 75 still working has a TSA account. obviously he can delay RMDs form the TSA until he no longer has W-2 income from the group. if he directly rolls over the TSA into an IRA now are there RMDs needed to be taken from the TSA before the funds go into the IRA, or since there was no 12/31 IRA balance his RMDs don’t have to begin until 2022 from the IRA?
thank you
Permalink Submitted by Alan - IRA critic on Thu, 2021-07-08 16:09
If client is allowed to take a distribution from the TSA, a direct rollover to an IRA will not require any 2021 RMD from either plan for 2021 for the balance distributed. However, should client retire prior to 2022, the direct rollover will be treated as including a 2021 TSA RMD, since the retirement would make 2021 the first TSA RMD year. The amount of the TSA RMD in that case would create an excess IRA contribution that would require correction like any other IRA excess contribution. Otherwise, if client works into 2022, the first RMD implication of the direct rollover would be that the IRA balance on 12/31/2021 would be higher and result in an IRA RMD for these funds in 2022.