RMD
I will be 70 1/2 in Nov 2013. I retired July 10, but will go back to work with this same company working “as needed” in September. I have a 403b with this company which I was told by my HR people that I would not be required to take an RMD from if I am still an employee on Dec 31 this year. There would be no penalty and this would not affect future distributions. My CPA is worried I will get in trouble with the feds. Can you shed some light on this?
Permalink Submitted by Alan - IRA critic on Fri, 2013-08-30 19:22
The employer determines the hourly or other thresholds under which you are considered separated from service or not. If they indicate to you at the end of the year that you have not separated from service, then 2013 will not be an RMD year with respect to this employer’s 403b plan. The IRS is not likely to question you about no RMD being taken prior to 4/1/2014, but just in case, you should request some documentation from the employer that you are still considered employed as of 12/31. It is very possible that if the “as needed” hours are low enough you will be deemed to have separated for RMD purposes. If that happens, you have until 4/1 to take the 2013 RMD and since your income will probably be higher in 2013 than in 2014, it would probably be beneficial to take the 2013 RMD in 2014 to make your taxable income more equal in each year.