Working past age 72 – are they still required to take an RMD from an ESOP?
Can you please provide insight into the following question:
If an individual is still working past age 72 – are they still required to take an RMD from an ESOP or can they wait until they actually retire?
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2021-04-20 17:31
If the individual is still working for the employer sponsoring the ESOP, is not a >5% owner of the firm, and the firm does not require ALL employees to start RMDs at 72, there would be no ESOP RMDs until the year of retirement. At that point, there might be NUA potential for the ESOP and the cost basis of the shares might make it feasible to delay RMDs until the RBD year in which the cost basis might cover the first two RMDs distributed in that year. In any event if the ESOP has a low cost basis, some detailed planning to incorporate NUA might be beneficial. Be aware that once RMDs begin the required LSD for ESOP or other employer shares (if 401k also) must be completed or NUA potential is forfeited.