MRD question
I have a client who turned 70 1/2 in March 2007. He took some distributions during 2007 but not enough to satisfy the MRD. I am aware that he must take 2 distributions in 2008 with the initial one by April 1. My question is can I offset the initial April 1st distribution requirement by the amount taken in 2007? Also, he will be age 72 in Sept. 2008, do I use the age 72 factor for both RMD’S that will be taken this year?Thanks for your help in advance!
Permalink Submitted by Edward Czapor on Tue, 2008-02-05 19:42
The RMD that must be taken by 4-1-08 to make up the shortfall is still part of the first RMD for the year of turning age 701/2, only delayed. So yes these two amounts are added for the RMD which would be based on the age 71 factor and account balance on 12/31/06. The 2nd RMD for 2008 must be withdrawn by 12/31/08, and would use the factor for age 72.
Ed C.
Permalink Submitted by [email protected] on Tue, 2008-02-05 21:28
ECZAPOREA thanks for your response! I need to provide some additional info to see if the answer might change. On 12/31/06 a significant amount of the retirement funds was in a defined benefit plan which was terminated in 2007 and was rolled into an IRA.
According to the actuary if the MRD was calculated the way the annuity rules for DB plans operated it would have required a distribution 3 times as large as the amount calculated for the 12/31/07 IRA balance.
So do you still think I can take credit for the IRA distributions taken during 2007? Can I use the age 71 factor for the initial distribution which is based on the 12/31/07 IRA balances as opposed to the 12/31/06 DB PLan?Thanks!