interesting RMD timing question

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ira smilovitz 12 years ago

On New Year's Eve I mentioned that anyone turning 65 on New Year's Day was getting a gift from the IRS since they could claim the larger standard deduction for 2013 even though their 65th birthday was in 2014. (If anyone doubts this, just look at the instructions for Form 1040 or Pub. 501)

This led me to wonder... What if your 70th birthday was July 1, 2013? Using the same logic (dangerous, I know) you would complete your 70 1/2 year on December 31, 2013 (or December 30 if you count 183 days) and would be required to take your first RMD in 2013. Has the IRS ever assessed a penalty for not taking the first RMD in a situation like this?

Fortunately, this is just a rhetorical question for my clients and me as none of us have a 7/1 birthday.

Ira Smilovitz

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Alan 12 years ago

Asked and answered in the Sec. 401 regulations:

Q?3. When does an employee attain age 70 1/2?

A?3. An employee attains age 70 1/2 as of the date six calendar months after the 70th anniversary of the employee's birth. For example, if an employee's date of birth was June 30, 1933, the

70th anniversary of such employee's birth is June 30, 2003. Such employee attains age 70 1/2 on December 30, 2003. Consequently, if the employee is a 5-percent owner or retired, such employee's required beginning date is April 1, 2004. However, if the employee's date of birth was July 1, 1933, the 70th anniversary of such employee's birth would be July 1, 2003. Such employee would then attain age 70 1/2 on January 1, 2004 and such employee's required beginning date would be April 1, 2005.

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D

D. Stussy 12 years ago

Asked and answered in the Sec. 401 regulations:

Q?3. When does an employee attain age 70 1/2?

A?3. An employee attains age 70 1/2 as of the date six calendar months after the 70th anniversary of the employee's birth. For example, if an employee's date of birth was June 30, 1933, the

70th anniversary of such employee's birth is June 30, 2003. Such employee attains age 70 1/2 on December 30, 2003. Consequently, if the employee is a 5-percent owner or retired, such employee's required beginning date is April 1, 2004. However, if the employee's date of birth was July 1, 1933, the 70th anniversary of such employee's birth would be July 1, 2003. Such employee would then attain age 70 1/2 on January 1, 2004 and such employee's required beginning date would be April 1, 2005. ======== OK, and when a person is born on February 29, they will generally not see the 70th anniversary of their birthdate for 284 calendar years at the earliest. ;-)

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interesting RMD timing question

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