Top 10 RMD Goofs, Gaffes and Blunders
Monthly IRA Updates
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TOP 10 RMD GOOFS, GAFFES AND BLUNDERS

By Andy Ives, CFP®, AIF®
IRA Analyst

Andy Ives

People stumble over themselves all the time. Bad advice is provided, misinformation gets freely disseminated, and sometimes normally smart individuals do less-than-smart things. Stories of good folks fouling up their required minimum distribution are rife. After all, the RMD rules contain a veritable minefield of traps and potential tripping hazards. Based on nothing more than personal experience, anecdotal evidence and conversations with industry insiders, here is a Top 10 list of RMD Goofs, Gaffes and Blunders:

10. Rolling over an RMD. RMDs are not eligible to be rolled over. This happens most frequently when company plan assets are rolled over to an IRA. If the RMD is not taken first, you now have an excess contribution in the IRA that needs to be corrected.

9. Spouses combining RMDs. One spouse cannot take an RMD for another spouse even if they file a joint tax return and report the correct overall RMD income. There is no such thing as a “joint IRA.”

8. Not taking liquidity into account for RMDs. You say you only have an LLC and tangible real estate in your self-directed IRA? The IRS does not care. Better sell something off to generate the liquidity necessary to meet your RMD requirements.

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Mailbag

Q: I’m looking to help a client minimize her taxes. She recently inherited an IRA from her father. She has taken the “Stretch IRA” option and is now receiving her required distributions. Can she utilize a Qualified Charitable Distribution to her church (verified 501c3) to reduce her tax liability and still maintain the stretch IRA?

Answer

Q: If a person is still working and contributing to a 403b, are they still required to take an RMD? Seem to be getting conflicting answers.

Answer

Q: Is there any news on the attempts in Congress to change the Stretch IRA?

Answer

Have a question for our IRA Techincal Team?
Email your questions to us at mailbag@irahelp.com. Selected questions will be featured every Thursday in the Slott Report.

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