403(b) RMD while still employed?
A 72 year old “retiree” that has an problem/question regarding his first RMD:
This person retired as a physical education teacher several years ago but continued on as a driver’s education instructor. (a position he has had for some time – same school district) He began receiving his teacher’s pension/full retirement benefits upon his retirement and in addition, was compensated roughly $11,000 in 2010 as the driver’s ed. instructor. His 403(b) provider mailed him a “vague” letter regarding his RMD in Nov. of ’10; his spouse, a former CPA, read the letter and determined he DID NOT need to take the 2010 RMD due to his employment with the same school district.
Is this correct? No RMD? Or do we need to take a 2010 (now in 2011) RMD distribution and make a correction?
Permalink Submitted by Alan Spross on Mon, 2011-04-04 21:17
The plan itself would have to define for him whether his current position and hours worked qualify under the plan provisions to be considered as “still employed” in 2010. In other words, the plan should not be sending out vague letters and should advise the employee if his current employment meets the “still working” requirement or not.
If he must take RMDs, he still may qualify to postpone RMDs on any pre 1987 accruals in the plan. That balance is not subject to the 2002 RMD Regs and RMDs do not neet to start until 75 on the pre 87 accruals.