RMD Rule When A Distribution is Made Prior to age 70 1/2
If a person with a traditional IRA turns 70 in March of 2015 and age 70 1/2 in Sept. 2015 but has been taking distributions each year leading up to age 70 1/2 does the withdrawal taken in March of 2015 count towards the RMD for age 70 1/2 even when the distribution is greater than or equal to the age 70 1/2 amount if they waited? Or, do they have to take another distribution once they reach 70 1/2 based on the 12/31/14 account value due in April of 2016? Then would they take a 2nd distribution for 2015 due by the end of 12/2016 based on account values 12/31/15?
Permalink Submitted by Alan - IRA critic on Wed, 2015-05-06 19:36
Distributions taken before the first RMD distribution year (2015) will result in a lower balance on 12/31/2014 and therefore lower future RMDs. This is the only affect of the prior distributions. The first distribution taken in 2015 automatically is deemed to apply to the 2015 RMD including distributions taken before reaching 70.5. If the March distribution does not complete the 2015 RMD, the balance must be withdrawn no later than 4/1/2016. Finally, the 2016 RMD based on the actual 12/31/2015 IRA balance must be completed by 12/31/2016. The actual date that 70.5 is attained has no significance (unless you do a QCD) other than making the calendar year the date occurs in the first RMD distribution year.
Permalink Submitted by Stephen Early on Thu, 2015-05-07 19:24
Thank you.
Permalink Submitted by Stephen Early on Fri, 2015-05-08 15:26
Alan: Based on the 12/31/14 year end balance his RMD for age 70.5 would have been $3,197.(due 4/1/16) He took a $4,000 withdrawal in March of 2015. Do you know the formula for determining th offset for the 2014 year end balnce for RMD? SteveYou mentioned in your reply it would reduce the RMD…
Permalink Submitted by Jose Morales on Fri, 2015-05-08 17:02
You may have misunderstood what Alan was saying. You do not get to offset the year end balance by taking more than the required distribution. Any distribution taken in 2014 will result in a lower year end balance, in and of itself, which will in turn reduce the calculated RMD for 2015. After 12/31/2014 the only adjustments to the year end balance for the purpose of calculating the RMD for 2015 would be to add back any outstanding rollovers or transfers (which would increase the calculated RMD).
Permalink Submitted by Alan - IRA critic on Fri, 2015-05-08 15:42
Not sure what your question is. If the 2015 RMD is 3,197 and a distribution of 4,000 was taken in March 2015, the RMD has been exceeded. Up to 803 could be rolled back to the IRA within 60 days of receipt of the distribution. There is no offset if he keeps the full 4,000. The 2016 RMD will be based on the actual 12/31/2015 IRA balance without adjustment. Of course, having taken out more than the 2015 RMD, the 2015 year end balance will be somewhat less than it otherwise would have been.
Permalink Submitted by sandi tompson on Wed, 2019-09-11 02:00
Birthdate is 3/31/49. Your calculator states Oct 31 2019 is RMD time. Do I need to wait until Oct 31 to begin my RMD’s. Or should I begin now? I’m confused about if I need to take it out only on Oct 31 or is it ok to do it now so that nothing gets messed up. also, please help me with this question:This year I have a small annuity from a masterdex 10. I will be 70-1/2 in October. My question isif I choose quarterly RMD: The second quarterly payment would not be received until 2020. Will that mess upmy taxes? Or is it better to do annual RMD since I will beginning in october of this year and to be age 70-1/2 in Oct.I was adding it up and it looks like I would save $20 year doing it monthly or quarterly. Thank you fortaking the time to help me. Its not a big one in your eyes, but will be something for me financially.Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2019-09-11 02:39
Any distribution you take in 2019 is credited against your 2019 RMD, so you can take it now if you wish. For your second question, check your other post. Not sure where you would be saving $20. You might be referring to your 2019 tax bill, but taking more of your 2019 RMD in 2020 will add to your 2020 tax bill. Since the IRA is small, you should probably keep it simple by following my suggestion on the other post.
Permalink Submitted by sandi tompson on Wed, 2019-09-25 20:29
Thank you for your replies. I appreciate you! I think where I made a mistake in my post is I have the options for installmetns fora guaranteed period. They are monthly, qtrly, annually. The amount saved by taking quarterly installments is 20.00. No big deal. But if I choose to receive my annuity payout amount quarterly, and I turn 70-1/2 towards end of the year, it may not be enough RMD for 2019. From what you mention, I can take another RMD in 2020 for 2019…but I may pay more taxes since there will be several payouts for the year 2020. I think I am understanding now. By your intelligent posts. So thankyou for sharing. (Notice I still say “think” alot. ..so am still learning!
Permalink Submitted by jeth wicron on Thu, 2019-09-19 14:30
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