403b to IRA rmd
have client who is 73. Had a 403b where he still worked but wanted to rollover 90% to an outside IRA (stretch issue). We did this in sept 08.
Question: under his 10% in the 403b, (since he is still working), he does not have to take an RMD out. But does he have to take out an RMD from his new IRA that he has since sept 2008?
Thank you for your help,
Doug
Permalink Submitted by Alan Spross on Mon, 2008-12-01 21:14
Doug,
No IRA RMD is needed for 2008 since there was no year end 07 IRA account balance.
Permalink Submitted by [email protected] on Tue, 2008-12-02 16:17
was i right in stating that since he is 72 and still working that he doesn’t have to take an RMD from his 403b?
Doug
Permalink Submitted by Alan Spross on Tue, 2008-12-02 19:26
Probably, but not in all cases. Some plans are more restrictive than the IRS required beginning date and require RMDs to start at age 70.5 even though the employee is still working. While these plans should notify employees of this, it is possible this was overlooked.
If a particular plan DID require RMDs at 70.5, these are PLAN RMDs and not statutory IRS RMDs. Therefore, the RMD issued from the plan is actually eligible for rollover to an IRA because the IRS does not view the plan RMDs to have begun.
Hopefully, pre 1987 403b accruals will not present a problem here. If a plan accounts for these, RMDs on those funds do not have to begin until age 75. However, if an IRA rollover is done, the pre 87 accruals are deemed to be the first coming out of the plan, and would become subject to IRA RMDs in the following year.
Permalink Submitted by [email protected] on Tue, 2008-12-02 22:13
Thank you so much for all your help throughout the year. Wishing you and your family and wonderful and safe Merry Christmas