75 year old man does direct rollover in year he retired…
Stopped working in 2007 and then moved part of his retirement to an TIRA in the same year. When must he take his first RMD from the TIRA? Have a tax advisor telling me by 12/31/2007 and another by 4/1/2008. Which is correct?
Permalink Submitted by Alan Spross on Thu, 2008-01-24 21:48
In this situation, the retirement plan has retained the RMD for the 2007 distribution year as part of the remaining balance in the plan. The plan must distribute that RMD prior to 4/1/08, which is his RBD for the plan. The first plan distribution year is 2007, and the 2008 RMD from the plan must be taken by 12/31/08. I am assuming that this man was not a 5% owner and was not otherwise subject to prior plan RMDs since he was working into 2007.
He has been subject to TIRA RMDs for 5 years, but if this is his first TIRA or with respect to the balance added by transfer, there is no additional RMD for 2007 because the additional amount was not in his TIRA as of 12/31/06. However, the employer plan RBD does not affect his TIRA, and the transfer will result in an increased TIRA balance as of 12/31/07. That total TIRA balance will determine the 2008 RMD which must be distributed by 12/31/08.
Therefore, the TIRA RMD must be distributed by 12/31/08, not 12/31/07 or 4/1/08. The amount that is due by 4/1/08 should be distributed from the remaining assets in the employer plan and the plan should be contacted in this regard prior to that date.