rmd
I have a client who turns 701/2 in 2011 still working will retire in January. My understanding he does not need to take an RMD from his 401k this year. Is it considered a deferral to 2012 and need to take two distributions in 2012. Thanks
I have a client who turns 701/2 in 2011 still working will retire in January. My understanding he does not need to take an RMD from his 401k this year. Is it considered a deferral to 2012 and need to take two distributions in 2012. Thanks
Permalink Submitted by Alan Spross on Tue, 2011-12-20 17:19
Since his retirement will be in 2012, his required beginning date is 4/1/2013. But 2012 will be an RMD distribution year and the 2012 RMD can be taken in 2012 or deferred to the first 3 months of 2013. Since retirement is so early in the year, perhaps income will be more even if the 2012 RMD is taken out before the end of 2012, so there is only one RMD taxable per year.
NOTE: There is a small chance that the plan requires RMDs to start at 70.5 even though he is still working, but the plan should tell him that if this applies. RMDs also start at 70.5 IF he is a 5% or greater owner of the company.