401(k) and IRA RMDs: Today's Slott Report Mailbag | Ed Slott and Company, LLC

401(k) and IRA RMDs: Today's Slott Report Mailbag

By Andy Ives, CFP®, AIF®
IRA Analyst



Question:

I am 70 ½ and still working in 2018.  If I work part time (still employed) in 2019, can I delay my 401K RMD until 2020?

Best regards,

Will


Answer:

Will,

If you are still employed by the company that is offering the 401(k) in 2019, and if you do not own 5% or more of that company, then yes, you can delay your RMD from that specific 401(k), if the plan allows it. This delay of your RMD will only apply to the 401(k) of your current employer. It will not apply to any traditional IRAs you may own, nor would it apply to another employer plan you might have with a previous employer.


Question:

I am a bit confused regarding my dad’s 2018 required minimum distribution from his IRA. Here are the facts:

 

· Mom died in 2017 when she was 87. My dad was sole beneficiary of her IRA, and he elected to treat it as his own. The 2017 year-end balance was $24,317.

· Dad turned 92 this year and has another IRA with a 2017 year-end balance of $75,392.

Can you please explain how I compute my dad’s 2018 RMD??

Many thanks!

Tom


Answer:

Tom,

Since your dad now has two IRAs, we need to calculate an RMD for both. Let’s start with the inherited IRA from your mom. Since your dad elected to “treat the IRA as his own” in 2017, it will be as if the IRA has always been in his name. For his 2018 RMD, we look up his age this year (92) on the Uniform Lifetime Table. The corresponding number is 10.2.  For your dad’s larger IRA, we use the same factor from the Uniform Lifetime Table and determine the RMD in the same.

Divide the prior year-end balances of both IRA accounts by 10.2 to determine the RMD for each account. Since your dad elected to treat the inherited IRA as his own, it allows him aggregate RMDs. If he would like, he can take the total RMD from one of the IRAs.

These accounts could be combined. If this is completed before the end of the year, your dad will have one 2018 year-end balance and only one RMD to concern himself with in 2019. The best method to use for combining the accounts is a trustee-to-trustee transfer to move the funds directly from one account to the other. A 60-day rollover should be the last-resort method and can only be used if your dad has done no other 60-day IRA-to-IRA or Roth IRA-to-Roth IRA rollovers in the past 365 days.

 


Posted in:

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to matt@irahelp.com for approval.

For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at matt@irahelp.com or (516) 536-8282 with any questions.

 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.