Still working exception for a 12/31/2024 date
Any opinions on the ‘still working’ exemption for a 79-year-old client with a retirement date / separation of service of 12/31/2025? Will the exemption be considered to have ended on 12/31, triggering his RBD for April 1st of ’26? Or will the IRS rely on the employer’s books and records to determine his status on 12/31? Perhaps a retirement date of 1/1/2026 would eliminate the gray area . Any thoughts appreciated. Thank you.
Permalink Submitted by Alan - IRA critic on Sun, 2025-04-06 18:09
If client retires on 12/31/2025, then 2025 becomes an RMD distribution year and as you indicated the RBD would be 4/1/2026. Making the retirement date in early January would prevent that and extend the RMD period for another year.
The IRS leaves it to the plan administrator to determine the date the employee is no longer active but has been clear that if the final day is 12/31 the employee retired in that year.
Permalink Submitted by Anthony Bossuyt on Sun, 2025-04-06 18:23
Thank you and much appreciated.