Still Working Exception Nuances

Submitted by IRAQuestion5 on Wed, 2022-09-07 18:36

Hello-

Client is 74 and lost their job with Company A in February of this year.

1. Am I understanding correctly they do not have to take an RMD for this year until April 1st, 2023? Therefore, in 2023 they would have two RMDs? The one from 2022 and the one from 2023?

2. Client started working at Company B recently and set up a 401k account there. If they roll the 401k from Company A to Company B, this calendar year they could qualify from the still working exception in 2023 and going forward but would have to take the 2022 RMD from Company A 401k prior to rollover. Correct?

3. If client rolls the Company A 401k to Company B in February of 2023, they could qualify from the still working exception in 2024 and going forward but would have to take the 2022 RMD And 2023 RMD prior to doing the rollover in February 2023. Correct?

Thank you so much!



Submitted by Alan - IRA critic on Wed, 2022-09-07 18:55

  1. Yes, that is correct.
  2. Also correct, but they should verify that Com. B does not sponsor one of those plans that requires all employees to take RMDs at 72. There are a few of those.
  3. Yes, RMDs would be required from the Com A plan for 2022 and 2023 before the rollover, but the still working exception would apply to the balance in Com B plan starting in 2023 and there would also be no RMD for the 2022 Com B contributions as there was no Com B balance on 12/31/2021.


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