Age 70 employee and RMD

Submitted by Ora Citron on Tue, 2017-12-12 21:51

I have found conflicting information on whether or not a 70+ employee must include the employee’s 401(k) in determining the employee’s RMD while working. One source said that the Summary Plan Document will specify if the employee can or must use the 401(k) as part of the RMD calculation (assuming other retirement assets exist outside the employer’s 401(k)). Another source says that a distribution from the 401(k) will not be treated as a RMD. Does anyone have the definitive answer?



Submitted by Alan - IRA critic on Tue, 2017-12-12 23:26

  • The way you phrased the question suggests that you think that other retirement plans affect 401k RMDs. They do not. Each 401k plan is independently subject to the RMD Regs.
  • That said, the IRS Regs state that if employees are still working for the 401k plan sponsor in the year they reach 70.5 and are NOT greater than 5% owners of the company, RMDs do not start until they retire. However, a 401k plan can also adopt more restrictive provisions than the IRS Regs and require ALL employees to start RMDs at 70.5 whether working or not. Therefore, the only way to know for sure if a particular employee is subject to 401k RMDs or not is to ask the plan administrator or review the plan provisions. The majority of plans do not adopt the restrictive provisions and allow non 5% owners to continue working without taking RMDs until the plan provisions (such as min hours or days worked) determine them to be retired.

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