MRD for 403b still working then retired

Submitted by peter sheehan on Wed, 2023-01-11 19:44

I have several IRAs that were IRA rollovers from 403b account from first employer that I have been taking MRDs from. I am now working for a second employer with a 403b account and have not yet taken any MRDs from that account due to still working exception. I plan to probably retire from second employer at the end of January of 2024. What divisor do I use to calculate the MRD I must withdraw from 403b account if I retire at end of January in 2024? I will be using 21.1 divisor for my MRD 2024 withdrawals from my IRA accounts during 2024. Do I use the same divisor number for for my first withdrawal from 403b account? Second, WHEN must my first MRD be taken from 403b account if I no longer work after end of January of 2024? Withdraw MRD sometime during 2024 based on 403b account value divided by 21.1 (divisor) on 12/31/23 or some other calculation (e.g., withdraw MRD sometime during 2025 based on 403 account value divided by 20,2 on 12/31/24). Thank you for any assistance you can provide.



Submitted by Alan - IRA critic on Wed, 2023-01-11 20:31

  • Your 403b RMD divisor will be the same as for your IRA. Since 2024 will be your first 403b RMD (unless you retire before the end of 2023), you have until 4/1/2025 to complete the 2024 RMD. You will use the same divisor and 12/31/2023 balance whether you delay the 2024 RMD until early 2025 or not. You will use the 20.2 divisor for your 2025 RMD based on the 12/31/2024 plan balance. If you defer the 2024 RMD to 2025, you will then have to take 2 RMDs in 2025.
  • In the event that you retire anytime in 2023, then 2023 becomes your first RMD distribution year with a divisor of 22.0 applied to the 12/31/2022 plan balance. You could defer that RMD to 4/1/2024 if you wanted to but would then have to take 2 RMDs in 2024 and you could not defer the 2024 RMD. Finally, whichever year in which you retire, you must complete your 403b RMD for that year before you can do a direct rollover to an IRA. If you did a rollover early this year, then retired later this year, part of your rollover would be treated as your 2023 RMD and because you cannot roll over an RMD, you would have an excess IRA contribution. Therefore, best to delay any IRA direct rollover until you are sure that you are going to work into the following year.

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