RMD for retiring 72 year old
I have a client who is 72 years old and still working. She hasn’t been required to take a RMD from her 401(k) because she is not a 5% owner of the company. She plans on retiring in June of this year. If she does an IRA rollover from the plan is she first required to take out her RMD from the 401(k) before completing the direct rollover? Does doing the rollover accelerate her requirment for the RMD from the 401(k)? Does she have until April 1, 2014 to do her RMD? If she were to leave the 401(k)alone for this year and do the rollover next year, how would this impact the required RMD?
Thank you for your help.
Permalink Submitted by Alan - IRA critic on Tue, 2013-03-26 19:55
Whenever she decides to do the rollover, it will trigger RMDs for that year which need to be taken prior to the rollover. For example, if the rollover is done this year, she must take the 2013 RMD out first. But since her required beginning date is 4/1/2014, she can delay the first year RMD by delaying the rollover to 2014. She would then have to take out both the 2013 and 2014 RMDs before doing the rollover in 2014. Sometimes participants roll over their 401k before retiring but then decide to retire later in that year. This results in the RMD deemed to have been completed, but then rolled over when it is not eligible. The RMD is then treated as an excess contribution to the IRA and must be corrected in the usual manner.