60 day Rollover and RMDs

Submitted by Amanda Minter on Wed, 2022-10-26 15:30

if my client has an IRA and will be rolling it over to another custodian yet this year, and has not taken an RMD, will the custodian withhold the RMD before the rollover? is it different if we request a custodian to custodian transfer? We are hoping to take the RMD from a different IRA, not this one we plan to roll.



Submitted by David Mertz on Wed, 2022-10-26 21:12

  • If there is a distribution and rollover, unless the RMD for the IRA being moved has already been satisfied with a distribution from another of the client’s traditional IRAs, part of the distribution will be the RMD and ineligible for rollover.
  • A trustee-to-trustee transfer of an IRA is neither a distribution nor a rollover, so the IRA could be moved by trustee-to-trustee transfer and then the RMD for the original IRA satisfied from any of the client’s IRAs.  An IRA custodian cannot force the client to take a distribution prior to doing a trustee-to-trustee transfer.
  • To avoid involving the one-rollover-per-12-months rule, move the IRA by trustee-to-trustee transfer, not by distribution and 60-day rollover.  It’s generally best to initiate the transfer at the receiving custodian so that the receiving custodian can provide the original IRA custodian with the information necessary for the funds to end up where they should and so that the original IRA custodian understands that it’s a transfer, not a distribution.

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