401k rollover over 70.%
if A client over 70.5 retires on December 31, 2013 does she have to take an RMD for the 2013 tax year or does she have to take an RMD in 2014 for the tax year 0f 2014?
if A client over 70.5 retires on December 31, 2013 does she have to take an RMD for the 2013 tax year or does she have to take an RMD in 2014 for the tax year 0f 2014?
Permalink Submitted by Alan - IRA critic on Tue, 2013-10-29 23:02
Retirement is considered effective on the last day of employment, not the next business day. Therefore, client’s first RMD distribution year would be 2013 and that RMD could be deferred as late as 4/1/2014. 2014 RMD must be taken by 12/31/2014.
Permalink Submitted by Patrick Doherty on Thu, 2013-10-31 19:15
thank you, were did you get that answer from or were can I read that Thanks again
Permalink Submitted by Alan - IRA critic on Thu, 2013-10-31 19:43
That is just the way most employers keep their books. I am not aware of any particular DOL rule. Client should verify with the specific employer whether the employment records show the effective retirement date of 12/31 or in January, due to the different RMD implications. Usually it is the specified last day of work even in cases where employee has accrued vacation pay coming. The IRS is not going to question the employer’s record keeping in cases like this.