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February 16, 2009

Outstanding Transfer

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Definition

A trustee-to-trustee transfer where the assets leave the delivering IRA in one year and credited to the receiving IRA in the following year.

 

Referring Cite

IRC §401(a)(9);  IRS Instructions for filing 1099-R and 5498  , IRS Publication 590 ,

 

Additional Helpful Information

An outstanding transfer is required to be added to the previous year-end fair market value (FMV) of the receiving IRA when calculating the required minimum distribution (RMD) for the year. For instance, if a transfer is initiated in 2009- resulting in the assets leaving the delivering IRA in 2009 and credited to the receiving in 2010, the market value of the transfer must be added to the 12/31/2009 FMV of the receiving IRA when calculating the RMD for 2010. Failure to add the outstanding transfer to the FMV will result in the calculated RMD amount being less than what it should be, causing the IRA owner to owe the IRS an excess accumulation penalty of 50% of the RMD shortfall.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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