RMD for 2008 retiree
Client both retired and turned 70.5 in 2008. Qualified money consists of $20 in IRA and $80 in 401(k) that he just retired from in 2008. Knowing that his RMD is due this coming April 1, 2009….the question is does he have to include his $80 in the RMD calc since he was active in the plan into the 2008 calendar year. This RMD calc would be based on Dec 31, 2007, right? He was still working in 2007, so not clear on if his 401k balance must be included since he was working and active in the plan during 2008 year. Thanks for any help.
Permalink Submitted by Anonymous (not verified) on Thu, 2009-02-19 01:27
RD,
Your client must take 2 RMDs as long as he has 2 types of retirement savings plans, an IRA and a 401k. The RMD can not be combined and taken only from one of the plans.
Yes, 2008 distributions are based on the account balance as of December 31, 2007.
Your client may want to move his 401k money into an IRA. The clients beneficiaries of his 401k may have more options available from the IRA than from the 401k.