I turn 70 ½ this year and my last day of work is September 30, 2019. Am I required to take an RMD from my work P/S 401(k) plan by April of 2020 and if so is the RMD calculated on the 12/31/18 account balance? My employer will roll my p/s 401(k) into my IRA on January 2, 2020.
Thank you for your help
Yes, you will. 2019 will become an RMD year because you will no longer still be working at year end. Any distribution or rollover you take will require the RMD for 2019 to be distributed at that time and not included in the IRA rollover. However, since you are not planning the IRA rollover until January, if you wanted to you could defer your 2019 RMD up to 4/1/2020 or the rollover date, whichever occurs first. Since you will have worked most of 2019 and will not in 2020 (although not clear where you are with SS benefits etc), you might avoid higher taxes in 2019 by deferring all or part of the 2019 RMD. This all depends on the numbers including the size of your 401k which determines the 401k RMD amount, and how it relates to your other income for each year. This situation presents some tax saving planning opportunities and is a one time situation. After 2020, things become much simpler with fewer choices. It may be worth crunching some numbers right after you retire.
If the distribution from the 401(k) that is to be rolled over to an IRA does not occur until 2020 you’ll need to receive distributions of both your 2019 *and* 2020 RMDs from the 401(k) before (or coincident with) initiating the direct rollover of the rest of the 401(k) to the IRA. However, that doesn’t affect your decision as to which year to take your 2019 RMD since the 2020 RMD will have to be satisfied in 2020 no matter what you do.
Permalink Submitted by Roberta Delisle on Wed, 2019-09-25 22:27
I need to know if I’m required to take an rmd from my 401(k) plan since I’m retiring at the end of September