Please check me on this. Client turned 70 in Dec 2008. Did not take IRA distribution. Turned 70 1/2 in 2009. Distribution not taken in 2009. I am saying she now has to take her initial delayed distribution before 4/1/10 and she has to take the normal distribution by 12/31, resulting in two this year. The waiver of IRA distributions in effect last year really has no effect on this, correct? It did not extend the delayed distribution. Her financial institution told her she did not need to take one until the end of this year.
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RMD was not required for 2009, but is resumed for 2010. -
The 2009 waiver of the RMD applies to 2009. That means you do not have to take RMD based on 2009. The 4/1/2010 deadline applies to 2009 RMDs for people who turn age 70 1/2 in 2009. Thus, there is no 4/1/2010 deadline, since there is no 2009 RMD.Comment
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No "Catching Up"
Don't understand whether this was part of the original question, but the non-distribution relief for 2009 does not create an amount which "rolls into" an RMD for 2010. The 2010 RMD is calculated on its own typical chart, with no effect from any event (or non-event) in 2009.Comment
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And that is exactly my point and my original question. I believe she needs to take her delayed distribution (which has nothing to do with the 2009 waiver) by 4/1/10. She COULD have taken a 2009 distribution should she have wished. It was optional regardless of the suspension under the law. Many people did it anyway. Since she did not, she now has to take two, IMO. She will be 72 this Dec and hasn't taken anything yet. She will use the FMV as of 12/31/09 to calculate both. She was allowed (under the old distribution rules) to defer until this year anyway. I don't think she gets an extra year just because of the non-distribution relief of 2009.Last edited by Burke; 03-26-2010, 03:05 PM.Comment
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I think she gets out to the distribution associated with 2009 by 4/1/10. See page 128 of Pub 17.Comment
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No, the delayed distribution that would have been due by 4/1/2010 is based on the 2009 RMD. Thus, if 2009 RMD is not required, the delayed distribution due 4/1/2010 is not required either.Originally posted by Burke View PostComment
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From TTA update http://www.thetaxbook.com/view_update.asp?1=121
Example 2: Jerry turns age 70½ in 2009. Under the new law, he is not required to take RMD by April 1, 2010. However, he is required to take RMD for 2010 by December 31, 2010. If Jerry were to die on or after April 1, 2010, the RMD for his beneficiary would be determined using the rule for death on or after the individual’s required beginning date.Comment
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Check Example 1 on page 34 of Pub 590.Comment
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You are correct and you probably don't need another thought on this but when I don't understand something I need it spelled out so I will try to do so.Originally posted by Burke View Post
When someone turns 70 1/2 they need to start taking out RMD. But they don't find this out until they do their taxes maybe. So the IRS allows them to take it the next year after they find out about it.
But then they have to take the one for that next year also. So: There would be a requirement for two in one year only in the year after someone turns 70 1/2. But it is only a requirement if they didn't take it out in the year they turned 70 1/2. (You could say there is a requirement to only take one per year and they allow the first one late.)
So, since they don't need to take one for 2009 and didn't - they don't need to take it the next year either.
But they need to take the one for 2010.JGComment
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Yes, I understood the general rule about the two distributions and have always tried to warn my clients. I just did not realize the special circumstance in 2009 would extend to the RMD extension that normally would have been eff 4/1/10. Anyway, Bees' post of the link was to a TTB Update Bulletin issued for the 2008 tax year (update dated 2/27/09). I actually had this in my files but did not particularly remember it. BUT I was very much surprised to find no mention of this situation or example in the 2009 TTB in the section on RMD's, which is where I would have looked this year for the info. MAJOR omission.Comment
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Ttb 1-19
TTB 1-19 What's New tab: ...no RMD is required for calendar year 2009 from IRAs....The next RMD is for calendar year 2010....Example #2: Jerry turns age 70.5 in 2009. Under the new law, he is not required to take RMD by April 1, 2010. However, he is required to take RMD for 2010 by December 31, 2010.Comment
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Got it. But this was passed long enough ago (2008) to have been incorporated into the text in Section 13-23. Glad I checked with the board. Thanks!Comment
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