When is 72 year old 401k participant considered retired?
Client has $3 mil in 401k. May retire this year. If he wants to avoid RMD for this year, must he wait until 1/1/23 to retire?
Client has $3 mil in 401k. May retire this year. If he wants to avoid RMD for this year, must he wait until 1/1/23 to retire?
Permalink Submitted by [email protected] on Thu, 2022-01-13 15:04
Is it “benefits eligible”?…..so if a 72 year old is eligible (and probably participating) in his 401k, even if only working 20% (part time), then he can avoid rmd? Is there any definition to this “still working”?
Permalink Submitted by Alan - IRA critic on Thu, 2022-01-13 19:39
There is no clear IRS definition of “still working” or “retired”. Employee status depends on the employer books as the employer will determine how many hours of work are required to remain as an active employee on the company book. Once the employee is considered no longer active, they become subject to the RMD rules for former employees. If the case of no continued part time work being done, the employee is treated as separating on the last day actually worked. For example, if the last day is 12/31, the retirement date is also 12/31 and that year will therefore become an RMD distribution year. The employee would need to come to work in January for RMDs to be extended for another year. Therefore, you are correct that this client needs to work at least one day in 2023 to avoid a 2022 RMD.