401k RMD for employee over age 70.5
Client has never taken an RMD from his 401k, even though he is 75, because he was still a full time employee. He officially retired the end of January 2018, Last 401k contribution posted the following week. Since he was an active employee and 401k participant during 2018, is a 2018 RMD required? Is there a rule on how much of the year you have to work to fall under the employee exemption to the RMD? Thanks.
Permalink Submitted by William Tuttle on Fri, 2018-12-14 16:25
Whether there are contributions or not, if you retire at any point in a year, an RMD is required for that year.
Permalink Submitted by Alan - IRA critic on Fri, 2018-12-14 19:50
The plan should have notified him by now that an RMD is required for 2018. Unlike an IRA, a 401k plan should be automatically distributing the 2018 RMD no later than the required beginning date, in this case 4/1/2019. If client does not receive the 2018 RMD by year end, he will then have to take 2 RMDs in 2019, the 2018 RMD by 4/1 and the 2019 RMD by 12/31/2019. Since he only worked one month in 2018, he would likely benefit by taking the 2018 RMD before year end, and therefore would be taxed on 1 RMD each year. The plan should have notified him of these options by now.