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I have to my first RMD this Dec or next April. Can I do part of the total in December and the rest in April?

Dec 16, 2014 by Barbara from Schererville, IN in  |  Flag
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Barbara, as you can see, the way you phrase the question can be confusing. The rule for RMDs is that in the year you turn 70 1/2 you have to begin taking distributions. But for that first distribution you can delay all or part of the distribution until April 1 of the following year. The distribution amount is based on the value of your retirement account assets as of the end of the previous year. If you have more than one retirement account it is based on the value of the sum of all the accounts.

So the simple answer to your question is that you can put off taking all or part of your first distribution until April 1 of 2015. It can get a little complicated if you are still working and have money in a 401k. With the amounts to which you refer (an RMD of $50,000 or more), I suggest seeing a CPA to make sure that there are no issues since the penalty for failing to take your RMD in a timely manner can be quite high.

I am a little concerned about your comment about wishing to delay the sale of company stock hoping for it to recover from a decline. I understand your desire. However, keep in mind that the RMD amount is set as of the end of the prior year. If you delay and your stock continues to decline - in the worst case going to zero - do you have the resources to withdraw the RMD? If not, you may want to reconsider.

Comment   |  Flag   |  Dec 17, 2014 from Suffolk, VA

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Removing $30,000 of your RMD in 2014 actually helped lower your 2015 calculation also. You'll need to remove the other $20,000 no later than April 1, and then this year's RMD will need to be removed by December 31. Hopefully your company stock has regained some of its value in this market also.

Comment   |  Flag   |  Jan 28, 2015 from Cedar Park, TX

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Larry R Frank Sr Level 20

RMDs, at first, may be confusing. You must begin taking RMDs by the end of December (I don't suggest waiting this long until the last minute because any paperwork delay will result in you violating the rules) the year you turn 70 1/2. You must take each subsequent RMD by the end of December as well.

There is a 1 April deadline in special cases. This IRS FAQ page should answer most of your RMD questions - from the horses' mouth: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Required-Minimum-Distributions-(RMDs)

Congratulations on reaching this benchmark!

Comment   |  Flag   |  Dec 16, 2014 from Roseville, CA

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If I understand you correctly you are trying to split one year's RMD amount across two calendar years.. Unfortunately any RMD that is taken is taxable in the year the distribution is made and attributable to that year's RMD requirement. You have until April 1st of the year after you turn 70 1/2 to take your first RMD however it is generally advisable to take your first one in your 70th year so that you don't then have to double up the following year.

View all 6 Comments   |  Flag   |  Dec 16, 2014 from Fort Washington, PA
Barbara

Hi Larry. I'm still confused. I had an IRA and I have stock from a company I used to work for. it was in lieu of a 401K. So my RMD from my balance in 2013 is 50k. I have cashed in my IRA for 30k. I still have 20k left to do this year. That means I have to sell some of my stock. I would prefer to wait to do this until next year seeing as it is down significantly. I was hoping I could do the remainder before April seeing as the IRS lets you defer your first RMD until then this one time. It doesn't say anywhere on IRS.gov that you cannot do it that way. I realize in 2015 I would technically have two RMD distributions that are taxable. I hope I am making sense. Again I do appreciate you helping me.

Flag |  Dec 16, 2014 near Schererville, IN
Larry R Frank Sr

Without very detailed specifics it is hard, and unprofessional, to give specific advice for you. You have a couple of things going on - that I have a general gist of - but suggested you use the "Find an EA" function for someone who can help you with your tax return this year on the website http://www.naea.org/ ... It seems you are mixing a couple of different tax categories (IRA and company stock) of which the RMD only would apply to one, the IRA. If you have the company stock in another IRA, then the RMD would be calculated on the sum of all 12/31/2013 balances. If the company stock is not in an IRA, then that would be a separate calculation. The only way you can be certain to have it done properly is someone who can do the 2014 tax return for you. Otherwise you risk getting incomplete advice and risk of penalty, etc. A EA can give advice and help before doing your tax return as well - and is highly suggested you get in touch with one. Unfortunately, RMDs do not consider whether markets are up or down for stock prices specifically (getting to your preference of having an option as to when to sell). It is simply based on the 12/31 IRA balance of the prior year. When to sell stock within an IRA for RMD purposes should be considered during the course of the year - not at the last minute at year's end. Please seek professional help as soon as you can - their small fee is well worth the peace of mind and avoidance of any possible penalties!

Flag |  Dec 16, 2014 near Roseville, CA

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Barbara,

The short answer is yes you can do part in each year. As has been stated above it would be best if you met with a professional who could help you to figure this all out.

One thing to consider about delaying part of your RMD into next year is that you still will have an additional RMD due by the end of 2015, so you will have part of 2014's RMD and all of 2015's RMD show up on your 2015 taxes if you delay that additional RMD amount until April 1st of 2015.

Generally speaking, if you have a higher expected income next year, it probably makes more sense to take the whole RMD by the end of 2014.

I will also echo what Arie said above, you are playing a risky game if you delay your RMD another 3 months with the hopes that the stock price will increase. Over a 3 month period there is no telling what could happen to the price of any stock and you could easily be regretting your decision to delay your RMD if the decision is focused primarily on the hope of a stock's appreciation over the next 3 months.

Comment   |  Flag   |  Dec 17, 2014 from St. Louis, MO

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