If
you have a qualified employer retirement plan, you generally need to start
taking your required minimum distributions (RMDs) no later than April 1st
of the year following the year you turn 70½. This is your required
beginning date or RBD. Certain employer retirement plans, however, may
have a “still working exception” for their employees who reach 70½ but are
still actively working for that employer.
An
employee who is over 70½ years old, still working for the company and doesn’t
own more than 5% of the business may elect to delay his/her RBD for taking RMDs
until April 1st of the year following the year the employee
retires. It’s important to note that employer plans may
offer this option but they are not required to offer a still working
exception.
Assume
you have a 401(k) and the plan permits a still working exception, an option you
have elected. Now assume you are 73 years old and you decide to retire in
July this year. Your retirement immediately triggers your RBD as
April 1, 2017 - your RMD requirement begins the instant you retire.
In
this example, if you chose to delay your first RMD and do not take it until,
say, February 2017, you will still need to take your 2017 RMD by December 31st
next year.
*There
is no “still working exception” for IRAs, Simple IRAs or SEP
IRAs.
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