RMD from 403b

Jim is a 76 year old pastor who continues to work part time in his role at the church. He has a 403b in custody through the church’s national church board. They also manage the non taxable housing allowance aspect of his distributions each year. Since he is still employed and contributes to the 403b, he is not taking RMD’s from this account. However, He is considering taking RMD’s starting next year, primarily to begin reducing the balance. He doesn’t need additional income at this time. The question i have is, if he starts taking RMD’s from this 403b and continues to work, will he have to continue taking them just because he started, or can he turn them off if he decides that he no longer wants to take them, if he continues to work at the church? Thanks



To my understanding, the rules would still apply that if he works for the full year, the RMD is not required.  So, should he take a withdrawal in 2021, as long as he works the full year in 2022, he would not be required to take the distribution.

  • He’s part time, and most plans have their own provisions defining the work hours requirements to be treated as “still working” for RMD purposes.  I don’t know if there are any carve outs for church employers. Otherwise, IF he is treated by the plan as still working, he is exempt from RMDs until he no longer qualifies. Once RMDs begin, they are permanent, and as you indicated if he does qualify through year end he will be subject to RMD for the year he no longer qualifies as well as all future years whether he again qualifies later or not.
  • As indicated above, any distributions he take voluntarily are not RMDs and can be rolled over. They do not trigger RMDs in any manner. However, should he no longer qualify anytime in 2021, then 2021 will become an RMD distribution year with the RBD being 4/1/2022.

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