401(k) RMD – > 70.5
401(k) participant; still working, will turn 70.5 in 2017 – he is not a > 5% owner
He was offer a generous severance package – to begin in June and end in 2018
question(s)?
Am I correct in thinking the beginning of severance (i.e. June 2017) equals a separation from service? He would be subject to an 401(k) RMD for 2017? Subsequently roll the assets into an IRA?
thank you
Permalink Submitted by Alan - IRA critic on Thu, 2017-05-11 20:48
Yes, “retirement” occurs in 2017 and makes 2017 the first RMD distribution year. However, his required beginning date is 4/1/2018 which means if he delays the direct rollover to 2018 he can also eliminate taking his first RMD in 2017 as he already will have a full earnings year in 2017. Best combination of options depends on the amount of his RMD and other income in each year.