Custodian does not follow RMD directions

Submitted by J Salivena on Thu, 2022-12-01 17:41

I turned 72 this year and know I’m required to take RMDs from my retirement accounts. Through a former employer, I have a 403(b) and TDA account with Mutual of America (MOA). In October, I sent MOA rollover requests for these accounts, to consolidate them with my traditional IRA at another custodian.

I know MOA is required to issue my RMDs before making the requested rollovers, but to date MOA has taken no action whatsoever. I sent several follow up emails to a general mail box in MOA’s withdrawal processing department and made numerous but unsuccessful phone calls to their 800 number. On the only occasion a representative did answer the phone, she told me not to worry because I had until April, 2023 to take the distribution. I told her I did not want to wait until 2023, as this will create a serious tax consequence.

What happens if MOA does not follow my instructions to issue my RMDs by December 31, 2022? They are not responsive, and I fear they might be targeting April, 2023 as their deadline to act. Is there any obligation for a custodian to follow an account holder’s RMD instructions? Is there something else I should be doing to get these distributions by December 31? If MOA does distribute in 2023 despite my instructions otherwise, can I still include these RMDs in my 2022 income? Is there something I should do or file before the end of this year to designate the RMDs as 2022 income?



Submitted by Alan - IRA critic on Thu, 2022-12-01 18:46

  • Perhaps if you work with your IRA custodian, they will be more successful in requesting direct rollovers from MOA. That would also force MOA to distribute your 2022 RMDs at the same time. You would receive an RMD check which would have 10% withheld, and a direct rollover check with no withholding. It is not clear if the TDA is subject to RMDs or not, as a TDA could be a NQ annuity not subject to RMDs. In any event, the lack of response from MOA is inexcusable, and you should be able to request a distribution or rollover whether you are in an RMD distribution year or not. You are now running short of time to get the 2022 RMD issued this year. You do not even know if they received your request. 
  • Are you sure that MOA is still supported by your former employer and that this is not an “orphaned” account?
  • Any balance you had in the 403b as of 12/31/1986 is not subject to RMDs until you reach 75. MOA may or may not have the records to determine that amount, but this could be a factor in the delay. 
  • Can you check your paperwork and clarify the tax status of the TDA?  
  • If the distribution is not made 2022, you will not receive a 1099R, and you cannot report the income in 2022 if the distribution is not made in 2022 despite having made a timely request. 
  • At this point, you might send another written request by registered mail with a return receipt, demanding distribution of the RMD. You do not want a distribution of the rest unless you want to deal with mandatory 20% withholding, A direct rollover would avoid that. 
  • As you probably know now, you should have requested rollovers of these plans (if TDA is rollover eligible) a couple years ago. 403b plans have been a particularly difficult to work with compared to 401k plans.

Submitted by J Salivena on Thu, 2022-12-01 21:22

Thanks.  I appreciate your response. 

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