Is RMD required from 401(k) for retiree
Employee (no ownership) is 75 (DOB 02-1937) and works until April 2012 when he retires. Wants to now rollover 401(k) monies to his IRA in 2012, his year of retirement. Is 2013 the first year he has to take an RMD from his plan retirement money or is he required to do an RMD in 2012 from his plan rollover monies? I know he was exempt from RMDs while employed, just need to know when his first RMD is due on this new rollover money and, if it is required in 2012, how is it to be calculated?
Permalink Submitted by Alan Spross on Wed, 2012-06-20 18:39
There will be an RMD required FOR 2012 based on the 12/31/2011 plan balance. This RMD can be deferred to the required beginning date of 4/1/2013, but only if he does not take an earlier distribution from the plan. The IRA rollover is considered a distribution and rollover and therefore would accelerate the RMD since the first distribution is deemed to apply to the RMD requirement. The result here is that if he wishes to avoid the additional taxable income added to his 4 months of earnings in 2012, the IRA rollover must be postponed until 2013.
If he does this, then both the 2012 and the 2013 RMDs for the plan should be withheld from the IRA rollover. They are both based on the respective prior year end balance in the plan. Age used is 75 for the 2012 RMD and 76 for the 2013 RMD.