401K Mandatory Withdrawals
My client is approaching 70 1/2 and still working at employer, participating in employer profit-sharing 401k. His company has told him he does NOT have to be required minimum distributions from that 401K, whether he remains working or not. I always understood that at least if he has terminated, he must begin RMD at age 70 1/2. Can any one answer ?
Permalink Submitted by Al Fry on Mon, 2010-01-18 16:53
Some clients think they know more than their advisors. Others get their planning advice from a co-worker at the local Pub, over a few Buds. Then many employers give employees the wrong info. The year a person retires (after age 70.5) is his first distribution year. He must take a distribution by 12/31 in that year; however he can wait to take it prior to 4/1 of the following year, requiring two in that year. The foregoing is why people over 70.5 should never retire on 12/31/xx; they should always retire on 01/02/xx+1.