working past 70 1/2, RMDs
I have a client who is 86. He still worked part-time this year and earned about $3000. He hasn’t worked in a couple of months and doesn’t plan to work anymore in the future. He has a fairly significant sum in his employer’s 401k. Last year he earned enough to contribute the maximum ($50,000) but this year has made only nominal contributions. Will he have to take an RMD from the 401k since he hasn’t worked in recent weeks or due to his level of earnings or does he get a pass for this year since he still had some earnings?
Help!
Thx,
Larry
Permalink Submitted by Alan - IRA critic on Tue, 2014-12-16 17:01
The plan administrator will have to answer this question because the plan provisions should define the amount of work required to be considered “still working” and exempt from RMDs. If this becomes his first RMD year as a result, his required beginning date will be next 4/1 so he could defer any 2014 RMD until early 2015 if he wishes. The current year RMD, if any, cannot be included in any IRA rollover he does. I expect that if the employer knows he does not intend to work in the future, then 2014 will become his first RMD distribution year.