Terminated 401k plan at age 72
Employee age 72 in 2022 still working and not a 5% owner in business. His employer terminated the 401k plan in 2022 and he had the option of rolling the old 401k balance to an IRA or the new 401k plan at same employer. Employee elected to roll old plan to an IRA which was done in June 2022. He expects to continue to work and contribute to the new 401k plan.
Prior to rolling over the old 401k to an IRA he had no other IRAs.
Question is does he have to take a 2022 RMD since the IRA balance was 0 on 12/31/21?
Thanks
Howard
Permalink Submitted by Alan - IRA critic on Mon, 2022-07-25 17:50
No, the first IRA RMD will be for 2023 based on the 12/31/2022 IRA balance. Note that employee must remain employed through at least Jan, 2023 or 2022 will become an RMD Distribution year and that would result in a portion of the recent rollover being treated as the 2022 plan RMD, and that portion would have to be distributed from the rollover IRA as an excess contribution since RMDs are not eligible for rollover. To avoid this, he should stay employed untll January.