turning 70 1/2 in the year after turning 70 | Ed Slott and Company, LLC

turning 70 1/2 in the year after turning 70

I would like to know if my client needs to take 2 distributions in 2012 if my he turns 70 1/2 in 2012 and then 71 also in July of 2012. So, his Bday is July and will be 70 in 2011 but doesn't turn 70 1/2 until Jan of the 2012. Does that require 2 distributions prior to Dec of 2012? Thank you,

No, since he turns 701/2 in 2012, he is required to take his first RMD for 2012 based on his age at the end of 2012 (71) using the factor of 26.5. When he turns age 70 is irrelevent, and does not require two RMD's for 2012. Of course if he waited until up to April 1 of 2013 to take the 2012 RMD, he would need to take two distributions in 2013.

Client needs only take one RMD in 2012. However, client can delay the first RMD until April 1, 2013 (the year following the year in which client turns 70.5), but in that case client would have to take a 2nd RMD by 12/31/2013.

For all taxpayers: 1) If the DOB is prior to July, the first RMD year is one year sooner than if the DOB is after June. But the RMD will be a lesser % of the prior year end balance than if DOB is after June. 2) Accordingly, if DOB is after June, the first RMD year is one year later than the above, but age 71 is used for the first RMD calculation instead of 70. The result is a smoothing out of the rate of distributions over the long haul and therefore being born on 6/30 does not mean that you are henceforth drawing down your IRA faster than someone born the next day even though the second person can start RMDs a year later. That's probably why the half birthday was used as the determining date instead of the actual DOB.

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