have individual IRA and 401k at 73
I know I asked this before but still a little fuzzy.
If a client has an individual IRA and a 401k and still working at 73 or over:
- He doesn’t have to take an RMD from the 401k since he is still working and in the year he stops or retires he must take an RMD, correct?
- what if he is 73 or older and retire date is 12-31-24, he has to take a RMD by 4-1-25 for 2024 and then another one for 2025, correct
- Does he have to take an RMD from his individual IRA at 73 since it is not part of his working?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2025-01-23 15:27
With the 401k, if participant is a greater than 5% owner, RMDs must start at 73. Otherwise, 401k RMDs begin in the year of retirement from that employer.
Q 2 – correct. If last day worked is 12/31, they are treated as retired in that year, not the next day (1/1).
Q 3- Yes, IRAs including SEP and SIMPLE IRAs are subject to RMDs without regard to working status, so age 73.
Some people who intend to work past age 73, can roll their IRA into the qualified plan at age 72 or prior and avoid RMDs until they retire from the qualified plan employer. If they wait to do this until 73, they will have to take the IRA RMD before rolling over the rest to the qualified plan.
Permalink Submitted by Douglas Bauerband on Thu, 2025-01-23 15:45
You wrote: Q 3- Yes, IRAs including SEP and SIMPLE IRAs are subject to RMDs without regard to working status, so age 73.
But if his SEP is in the company name, then he doesn’t have to take an RMD until he retires, correct?
But if the SEP is under his name alone, (he still funds his SEP IRA), then he has to take an RMD from that account too, correct?
Thank you.
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2025-01-23 16:22
SEP IRA RMDs begin at 73.
Only qualified plans (eg 401k, 403b, 457b) are eligible for participants to delay RMDs until retirement. This is not possible with traditional, SEP, or SIMPLE IRAs regardless of whether the taxpayer is an employee or the employer.