Tax Law (Questions About Taxes)/RMD Distribution

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QUESTION: Mr. Stancil

My birthday is May 28, 1946.  I will turn 70 1/2 on November 28, 2016 meaning my RMD (Required Minimum Distribution)will be due by April 1,2017.  I am reading that in order to avoid taking two (2) in the same year I can take one in year 2016 and the other one before April 1, 2017.  The first one can be taken anytime during year 2016. Is that correct?

I am not sure if I need to take one after April 1, 2017 or if the two above qualify for the year 2017?

Thanks

Ron

ANSWER: Ron,

Thanks for your question.

You may take a distribution in 2016 at any time. Since this is the distribution for the year you turn 70 1/2 you may delay taking it until April 1, 2017. Regardless of when you take this RMD, you must take an RMD for 2017. This one must be taken in the calendar year 2017 any time during the year.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: The reason I would take one in year 2016 and another before 4-1-17 is to lessen my tax burden. Taking it all before 4-1-17 would would cause more taxes in year 2017 instead of splitting it up prat in 2016 and part in 2017 like $5,000 each time as i have a lot in IRAs.

I think you missed myquestion as to whether this will satisfy my RMDs or will I have to take another one between 4-1-17 and 12-31-17. Maybe I did not word that part correctly?

Thanks again

Ron

ANSWER: I did answer your question. You can take one in each year that satisfies the requirements. No third distribution required for 2016-17.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Sir, let's try it one more time with some numbers.  My birthday is May 28, 1946 turning 70 1/2 on November 28, 2016.  At the end of of year 2015 my Traditional IRA balance will be let's say $212,000.  Based on the IRS Distribution schedule Age 70 requires 27.4 years or 3.65% for an RMD.

I plan to take a little more than 3.65% doing $10,000 instead of $7,738
($212,000 x .0365%=$7,738.

During the year 2016 probably around July I, 2016 I will do an RMD for $5,000 and the following year between January 1, 2017 and April 1, 2017
I will do another $5,000.

I think the above two(2)RMDs qualifies for reaching 70 1/2 prior to April 1, 2017. Therefore my question is will I have to take another distribution between April 1, 2017 and December 31,2017?

I think by your saying" no third distribution required for 2016-2017" means nothing has to be made from April 1,2017 through December 31, 2017, correct?

One more thing, during year 2018 all I should have to do is to take the  RMD anytime during that year based on the IRS 26.5 year chart at a rate of 3.77% of my year 2017 end of year IRA balance,correct.

Sorry to be such a pain.for the confusion.

Thanks again

Ron

Answer
No. No. No. Your distribution that will be taken in 2017 can be taken at any time during the year. Only your initial distribution must be taken by April 1, 2017' but you are taking that in 2016. After the 2016 distribution, distributions may be made at ant time during the year.

John Syancil, CPA

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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