Retroactive RMDs for people turning 70.5 in 2020??
I hear a lot of wacky things from the service centers of various IRA custodians. But I just had one that really had me scratching my head.
IRA Owner will not turn 70.5 until this year (2020), so he falls under SECURE. No RMDs until 72.
Service Center for Custodian X was telling client that he is only “deferring” RMDs until he reaches 72, at which time, he’ll be required to “double-down” and take his RMD for age 71 and age 72.
Odds are high that the service center rep was confused about the two RMDs in one year if you push your first one to April 1st, and then have a second one on 12/31. Or they are confused about people turning 70.5 in 2020 having no RMDs for 2020.
But I like to cover my bases. Am I missing something esoteric here? Retroactive RMDs for people turning 70.5 in 2020? I have not read or heard of anything resembling this.
Permalink Submitted by Alan - IRA critic on Wed, 2020-01-22 02:46
You aren’t missing anything. The CSR appears confused over the difference between RMD distribution years and RBDs and came up with some kind of hybrid rule. I wonder how these custodians will deal with unnecessary distributions triggered by their advice mischaracterized as RMDs when the taxpayer does not have a rollover available.
Permalink Submitted by Adman Gilly on Wed, 2020-01-22 05:10
Does it mean Distribution factor on Uniform table for Age 70 and 71 will longer be used?
Permalink Submitted by Alan - IRA critic on Wed, 2020-01-22 14:38
Correct. Of course, these divisors will continue to apply for those who reached 70.5 by 12/31/2019 until those people reach 72. Not sure if the IRS wlll bother to remove these ages from the table at that time.
Permalink Submitted by David Mertz on Wed, 2020-01-22 16:19
I think the IRS must leave the age 70 and 71 entries in the table for exactly the reason you indicated, so that those who reached age 70½ prior to 2020 will be able to calculate their RMDs for those years, say, if they missed taking an RMD for those years and are taking it late. (Although I suppose one doing this calculation should really be looking at the table in effect for the year for which they are calculating the RMD, so it would be reasonable to drop the age 70 and 71 entries after 2020 since everyone reaching age 70½ in 2019 or earlier will have reached at least age 72 in 2021.)