First RMD from 401k after working past 72
Client is 78 and still working. Her last day is 12/31/22. Since she only has a 401k, she hasn’t been required to take an RMD. Once retirement, she will need to start. What day does it have to be made? Is 12/31/22 considered her retirement date or is it 1/1/23? We were unable to move her retirement date to 1/1/23 due to complications with medical coverage.
Permalink Submitted by Alan - IRA critic on Wed, 2022-12-07 02:24
Her retirement date is the last day on the payroll, therefore she will have retired in 2022 and 2022 will become her first RMD distribution year with the RBD being 4/1/2023. At least you explored the possibility of moving it to January to delay RMDs for another year. This means that both her 2022 and 2023 RMDs must be distributed in 2023, however you might determine if an in service distribution done now that will satisfy the 2022 RMD will be of benefit. The issue is the amount of plan distributions plus 2022 salary will best equalize taxable income for both years. Note that if she completed any direct rollover earlier this year, that distribution will cover her RMD if she retires on 12/31. An IRA rollover done in 2023 must be delayed until both the 2022 and 2023 RMDs have been completed.