Deferred Compensation and RMD beginning date
I have a client who turns 70 1/2 in 2010 and has money in a 403B plan with an employer where he used to work. He is no longer employed at that employer but is receiving deferred compensation from the employer for the next 5 years. I believe that this is being reported to him on a W-2. Also he does not own any part of the institution.
Can he delay taking his RMD from this 403B due to him receiving deferred comp reported to him on a W-2?
What is the statutory definition of employed or not employed as it relates to delaying the distribution beyond 70 1/2.
Thanks as always.
Howard
Permalink Submitted by Alan Spross on Mon, 2010-01-18 22:17
Howard,
The definition of retirement would be the same as for separation from service, and that would be determined by the plan document or perhaps be indicated in the SPD. While there can be differences from plan to plan, there must be some level of active service to not be considered retired for purposes of when RMDs must begin from the plan. The collection of deferred comp would not in itself justify deferral of the plan required beginning date.
In more complex situations, the plan administrator should be consulted, particularly if this is material to the selected retirement date.
Permalink Submitted by Howard Hook on Tue, 2010-01-19 15:17
Alan,
Thanks. Hepful as always!
Howard
Permalink Submitted by Diana DeCharles on Mon, 2014-06-30 17:01
If a client, age 80, has been contributing to a 403(b) plan and decides to retire this year. When would he have to take an RMD?If his beginning date is the year after he retires, which would be 2015, would the distribution in 2015 be calculated on the end of year 2014 value.Also, would this be the only distribution required in 2015?
Permalink Submitted by Alan - IRA critic on Mon, 2014-06-30 18:11
If he retires this year, there will be a 2014 RMD due, but that RMD can be delayed until 4/1 in whole or in part. If delayed, then both the 2014 and the 2015 RMDs will both be taxable in 2015. The 2014 RMD is based on the 12/31/2013 balance and the 2015 RMD is based on the 12/31/2014 balance. Any IRA rollovers cannot include the RMD amounts that must be taken in the rollover year.