70 1/2 still working with IRA funds in Plan
I know that if someone is still working at age 70.5 they don’t have to start RMDs from ER plan but what if they have rolledover IRA funds into the 403b. Do they have to still take out the RMD for the IRA that was rolled into the the plan. I know that they will have to take RMDs from any other IRAs outside of plan as well as anyother ER plans.
Also could you please provide where this answer would be found.
Thanks,
Nick
Permalink Submitted by Alan Spross on Wed, 2009-04-08 23:41
Once the IRA funds are rolled into the 403b, they acquire the RMD requirements of the plan, so this strategy can be used to defer the former IRA RMD requirement. However, a plan does have the authority to require RMDs at age 70.5 for the entire plan, rather than the IRS definition of the RBD in the year following separation from service. A 403b plan may also include the pre 87 403b plan accrual RBD of age 75, irrespective of an IRA rollover to the plan. Therefore, it is good idea to verify that the particular 403b plan does NOT require RMDs to start at 70.5. The issue of >5% ownership is moot with a 403b plan.
I do not know of a single reference source to document this. 403b RMD requirements follow section 401(a)(9) rules, and in those rules there is no mention of a requirement to maintain separate accounting balances for incoming rollovers, as would be needed if they maintained their prior RMD requirement.
Permalink Submitted by [email protected] on Thu, 2009-04-09 12:59
Alan,
Thank you very much.