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Bill
Bill , Financial Advisor
Category: Finance
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Experience:  EA, CEBS - 35 years experience providing financial advice
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I am 71 years old and still working. I have taken a RMD from

Customer Question

I am 71 years old and still working. I have taken a RMD from my IRA. Do I have to take a RMD from my 401k and 403b now or only after I retire??
Submitted: 5 years ago.
Category: Finance
Expert:  Bill replied 5 years ago.

Bill :

As long as you own less than 5% of the employer and the plan document does not require mandatory distributions at age 70 1/2 regardless of continuing to work, then you do not have to take RMDs until after you retire.

Customer :

Can individual plans sponored by the employer require RMDs even though the employee is still working?

Customer :

I am not sure who's court the ball is in. Please answer the above reply.

Expert:  Shawn P Adamo replied 5 years ago.

No they cannot. Federal law takes precedence.

Customer: replied 5 years ago.

I guess we have a shoot out. The University of Texas thinks they can require RMDs.

 

I have to leave the office now. I want to hear your opinion, but I will accept the answer

whatever your reply.

Expert:  Bill replied 5 years ago.

A plan is permitted to include a provision requiring RMDs after age 70 1/2 even if a participant is still working for the employer.

 

From the IRS website:

 

"The required beginning date is April 1 of the first year after the later of the following years:

  • Calendar year in which the participant reaches age 70½.
  • Calendar year in which the participant retires.

However, a plan may require that the participant begin receiving distributions by April 1 of the year after the participant reaches age 70½, even if the participant has not retired." http://www.irs.gov/retirement/sponsor/article/0,,id=151926,00.html

 

Also see page 19 - http://www.irs.gov/pub/irs-pdf/p560.pdf

 

http://www.mhco.com/library/Articles/2004/ARMD_RBD_092304.html

 

 

See Treasury Regulation 1.401(a)(9)-2, Q & A #2(e)

 

(e) A plan is permitted to provide that the required beginning date for purposes of section 401(a)(9) for all

employees is April 1 of the calendar year following the calendar year in which an employee attains age 70

1/2 regardless of whether the employee is a 5-percent owner.

 

http://www.hbbllc.com/courses/postmortem/1_401a9_2.pdf

 

http://www.dol.gov/ebsa/publications/401kplans-supplement.html

 

 



Edited by Bill on 1/13/2011 at 9:30 PM EST
Expert:  Shawn P Adamo replied 5 years ago.

I am a CPA but federal law takes precedence. They may call your plan a 401k or a 401(3)b but it is the same. They CANNOT force you to take a distribution from that plan if still employed by them.

 

They CAN if it is a pension plan.

 

I need to know EXACTLY the type of plan. Plan name.



Edited by Shawn P Adamo, QFP, CPA/PFS, CRPC on 1/13/2011 at 10:30 PM EST
Expert:  Bill replied 5 years ago.

A 401(k) or 403(b) plan document can require you to take an RMD while still employed. Most plans don't but it depends on the specific language in the plan.

 

The treasury regulation I referenced above is the federal law.

 

 

http://www.retirementdictionary.com/definitions/requiredbeginningdaterbd

 

Bill, Financial Advisor
Category: Finance
Satisfied Customers: 3151
Experience: EA, CEBS - 35 years experience providing financial advice
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