401(k) RMD

Submitted by Bob Foland on Mon, 2017-06-05 20:02

Client has continued to work past 70 1/2, has no ownership in his company and has not taken a distribution to this point. He plans to retire at the end of the year. I think he needs to wait until early next year so that he can postpone his first RMD from the 401(k) until 2018. He says that he can retire this year and wait until 4/1/18 as with an IRA RMD. He’s a smart guy, and now he has me wondering if I’m wrong. What will his RBD be?



Submitted by Alan - IRA critic on Mon, 2017-06-05 20:45

Client is correct. If he retires this year, 2017 will be his first RMD distribution year, but the RBD for taking that RMD will be 4/1/18.  He would then have two RMDs due from the 401k taxable in 2018. That said, if he postponed his retirement until next January, he would not have a 2017 RMD to complete. He could then do a direct rollover to an IRA in 2018 with only the 2018 RMD distributed outside of the rollover funds.

Submitted by Ben Meyer on Tue, 2017-06-06 02:14

But be aware that if he is planning to perform a rollover, or partial rollover, of the 401(k) to an IRA anytime in 2017 he must take the RMD first, assuming that the retirement occurs later in 2017.

Add new comment

Log in or register to post comments