RMD at retirement

Submitted by Roger Fine on Sun, 2023-02-19 01:49

My wife, who works for the state, will retire in 2023 at age 78. Does she have to take an RMD for 2023 and for 2024? Can she take her 2023 RMD (if one is required) prior to her retirement date? She is likely to retire at the end of the calendar year.



Submitted by David Mertz on Sun, 2023-02-19 02:15

  • If she retires in 2023, she will have an RMD for 2023 and beyond from the plan provided by the employer from which she is retiring.  Her required beginning date will be April 1, 2024, so she can delay her first RMD until 2024 if it makes sense to take both the 2023 and 2024 RMDs in 2024 instead of taking the 2023 RMD in 2023.  That might make sense given that she will have a full year of wages in 2023 and none in 2024, likely making 2024 income lower.
  • If the plan allows in-service distributions, she can take the 2023 RMD prior to retirement.

Submitted by Alan - IRA critic on Sun, 2023-02-19 02:23

  • A retirement at the end of the year will result in that year being the first RMD distribution year, but she has until 4/1/2024 to complete her 2023 RMD. And if she works for the entire year, she would probably not want RMD income in addition to salary. It would probably make more sense to defer the 2023 RMD to early 2024 and she would then have to complete the 2024 RMD by the end of 2024. Generally, it would be best to equalize your taxable income between 2023 and 2024, but you should plan by the actual numbers. 
  • If her last day is 12/31, she will have retired in that year, not the following year. 
  • Any rollover to an IRA should only be done after the RMD for that year has been completed or there will be an excess IRA contribution that will have to be removed.
  • If she wants to take the 2023 RMD before retirement she can, but then your taxable income will include a full year of salary plus the 2023 RMD.

Submitted by William Tuttle on Sun, 2023-02-19 03:51

If necessary to equalize 2023 and 2024 marginal tax rates, phaseouts and cliffs. A portion of the 2023 RMD could be taken in 2023 and the remainder by 4/1/24.

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