Advanced Underwriting Consultants

Question of the Day – April 10

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  Can my client satisfy her IRA minimum distribution requirements by taking extra distributions from her 403b account?

Answer:  No.

Here’s an excerpt from IRS Publication 560:

Required Distributions

A qualified plan must provide that each participant will either:

  • Receive his or her entire interest (benefits) in the plan by the required beginning date (defined later), or
  • Begin receiving regular periodic distributions by the required beginning date in annual amounts calculated to distribute the participant’s entire interest (benefits) over his or her life expectancy or over the joint life expectancy of the participant and the designated beneficiary (or over a shorter period).

These distribution rules apply individually to each qualified plan. You cannot satisfy the requirement for one plan by taking a distribution from another. The plan must provide that these rules override any inconsistent distribution options previously offered.

Here’s a link to a handy IRS chart on RMDs.  Mid-way down the chart the point is made that 403b plan RMDs may be taken from other 403b plans, but not from IRAs.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.