Profit-Sharing Plan RMD
Alan,
My client’s DOB is 5/8/1944 so he will turn 70.5 on 11/8/2014 and his RBD is 4/1/2015.
He is currently an employee of a company that has recently shut down its profit-sharing plan.
On 12/31/2013 he still had a balance in this profit-sharing plan. On 3/14/2014 he rolled his balance into an IRA.
Will he need to take an RMD for 2014 based on the 12/31/2013 profit-sharing plan balance?
Thank you,
Chris
Permalink Submitted by Alan - IRA critic on Tue, 2014-04-01 15:56
If he is still working there at the end of 2014 and is not a 5% or greater owner of the company, he should not have a plan RMD for 2014. Termination of the plan does not affect this if he remains employed there. There is a small possibility the plan provisions call for RMDs to begin for all employees at 70.5. That would be a plan RMD, not a statutory RMD. If that were the case client could still roll that plan RMD over to an IRA, which he has already done. If he retires before year end, then 2014 will become an RMD year and the RMD amount will have to reported as taxable income and that amount will have to be removed from the IRA as an excess contribution.