RMD

Submitted by ShipsnGiggles on Wed, 2022-11-30 18:56

I have a “one off” tricky situation. Here are the facts

Individual has an $11,000 RMD (2022)
Jan2022 – distribute $2,000 to charity (leaving $11,000 RMD)
March – distribute $100k
April repay $100k via 60-day rollover
June distribute remaining $11,000 RMD.

Analysis —
The “first dollars out” rule says the first dollars distributed automatically satisfy the RMD for the year. That said, the January distribution of $2,000 is NOT a QCD and instead taxable distribution that goes toward satisfying the RMD – Remaining RMD is $9,000
March distribution of $100k – the first $9,000 goes toward satisfying the remaining 2022 RMD. The remaining funds ($91,000) can be rolled over in the 60 day window (assuming no other rollover in the last 365 days). The $9000 that was rolled over is now an “excess contribution” and needs to be removed (with earnings)

Is this correct?

Thank you



Submitted by Alan - IRA critic on Wed, 2022-11-30 20:36

  • Yes, 9000 of the prior rollover was RMD and an excess IRA contribution other than to the extent the person was eligible to make a TIRA contribution for 2022 that was not made. The problem is that the 9000 would be returned but the 11,000 distributed later will not be eligible for rollover due to the one rollover limitation. The person will be left with total taxable distributions of 22,000 as a result of the last distribution, assuming no gains on the return of excess. 
  • The IRS relies on IRA custodians to prevent the rollover of RMD funds, but due to the RMD aggregation rules and possibility of additional IRA accounts, the custodians are not able to prevent these excess contributions in many cases, and the IRS does not know the dates of distributions and rollovers, only the amounts. 


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