401(k) Required Minimum Distributions (RMD)
Case Facts:
Client will be age 70 1/2 on July 15, 2019. She plans to retire a few weeks before she turns 70 1/2 on June 30, 2019. Questions are as follows:
– It’s my understanding that the client will need to take an RMD from her 401(k) this year. Calculation will be based on the 12/31/2018 401(k) account balance. Does the client have the option of waiting until April 1, 2020 to take the first distribution?
– Is it advisable to have the client review the 401(k) plan document in order to determine exactly what the plan allows in this case?
Any other thoughts on the subject would be greatly appreciated.
Permalink Submitted by Alan - IRA critic on Fri, 2019-03-08 16:28
Yes, 2019 will be the first RMD distribution year from the plan, however all or part of that RMD can be delayed until 4/1/2020. Most all plans allow deferral, however if there is a direct rollover to an IRA in 2019, the RMD will have to be distributed at that time. If the client has a Roth 401k balance, IRS rules allow the RMD to be satisfied using any combination of pre tax or Roth balances, but some plans do not allow this flexibility. If there is a Roth 401k balance here, best to check with the plan for how the Roth is handled with respect to RMDs.