Timing of retirement date and employer plan RMD
Taxpayer is 77 and will retire from university system Dec. 31, 2014. He has a 403B and ORP out of which he has taken no distributions due to the fact that he is still employed. Will he have to take a RMD for 2014 since he is clearly over the age of 70 1/2 and officially retired in 2014? If so, does it not make sense to delay retirement to Jan 1, 2015? He wants to make sure he doesn’t have to take two RMD’s in the same year (2015). Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2014-12-11 18:45
Retirement anytime in 2014 will make 2014 an RMD distribution year. If retirement is delayed until January, the first RMD distribution year will be 2015, with an RBD of 4/1/2016. Since he will have minimum salary in 2015, taking the 2015 RMD in 2015 will eliminate either an RMD along with a full salary year or two RMDs in the same year. Taxpayer should check with the plan to determine the earliest effective date in 2015 he can retire to eliminate 2014 as the retirement year. Jan 1 is a holiday and he should probably avoid that date unless the plan clearly confirms it is OK.