Retiring after RBD
I have a client who is 74 years old and will be retiring in August, 2024. She only has a 401k through her employer and has not taken RMD’s given her employment status.
She will rollover part of her 401k to an IRA in later in 2024 and will leave some assets in her 401k. What is her RMD requirement in 2024? Given that the 401k had a balance as of 12/31/23, it would appear she has an RMD requirement from her 401k but not her IRA as it did not exist in 2023.
Any suggestions?
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2024-07-16 13:50
Since 2024 will be an RMD distribution year for the 401k, she should first retire, then request that the RMD be distributed. After the RMD is completed, she can do a direct rollover of the portion she wishes to an IRA. In 2025 she will have an RMD due for both the 401k plan and the IRA.
If she wanted to avoid any RMDs in 2024 because she will have worked 8 months, she could leave the 401k untouched until January, 2025, then take 2 RMDs from the 401k (2024 and 2025) and then do the direct rollover.