RMD while being employed
Is a person required to take a RMD for a 401(k) plan that he is still contributing to in the year he turns 70 1/2? Or can the RMD be calculated based on the 12/31/12 IRA asset values only; excluding the 401(k) assets?
Is a person required to take a RMD for a 401(k) plan that he is still contributing to in the year he turns 70 1/2? Or can the RMD be calculated based on the 12/31/12 IRA asset values only; excluding the 401(k) assets?
Permalink Submitted by Alan - IRA critic on Wed, 2013-05-08 17:14
Most 401k plans do not require RMDs at 70.5 for employees still working as long as they are not a 5% owner of the employer. In that case, RMDs would only apply to IRA accounts.
Permalink Submitted by mk foss on Wed, 2013-05-08 22:51
If the person is a 5% owner of the business, he is required to take a 401(k) RMD based on the 12/31 value the prior year. If not, no 401(k) RMD is required while still working. In any case, IRA balances are NEVER combined with 401(k) balances to determine RMDs. Each 401(k) plan needs a separate calculation of an RMD. IRAs can be aggregated to determine the RMD.
Permalink Submitted by JoAnn May on Thu, 2013-05-16 15:01
What about if the person, over 70 1/2, who is a 100% owner, but his plan has a fiscall year end? What date do you use to calculate the RMD?
Permalink Submitted by Alan - IRA critic on Thu, 2013-05-16 16:25
Use the 12/31 balance of the year prior to the RMD year. In other words, same date as for a CY plan.