Jane is required to take her first required minimum distribution (RMD) this year. Which of the...

Jane is required to take her first required minimum distribution (RMD) this year. Which of the follow are true regarding that distribution?

The distribution can be in cash or in kind
The first distribution can be delayed until April 1st of the following year
The IRA is valued as of the last day of the previous year in making distribution calculations
If the distribution is deferred until the following year, she will have to take two distributions next year

1, and 2

1, 2, 3, and 4

Solutions

Expert Solution

FIRST REQUIRED MINIMUM DISTRIBUTION

ANSWER : 1,2,3,&4

The 4 options given are true regarding the first required minimum distribution

In the case of first RMD the distribution can be in cash or in kind as per the tax advantages. Whatever comes out is taxed when distributed, and there are no embedded gains on either the cash or in-kind distribution.

The first distribution can be delayed until april first of the following year. For your first RMD , you can defer the distribution to april 1st of the following year.

The last piece of calculation is your prior year-end account balance. Divide the factor balance of previous year from this step. It will be the amount of your RMD.

If the distribution is deferred in the current year , then you have to take two distributions in the next year, So be careful with this, because you may be facing a larger tax liability than you wanted, since you had to take two distributions in the same year.

ekkarill92 answered 1 year ago

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