RMD

[garymoresi]

I retired 01/27/17 at age 64 and my DOB is 03/02/1953. I am uncertain when I am required to take RMD. Was I supposed to take RMD when I retired or April 1st of 2027 after I become 73?

[conniem123]

Hi garymoresi,

I hope you are having a great day!  

RMD rules apply to all employer-sponsored retirement plans, such as pensions, profit-sharing, 401(k), 403(b), and 457(b) plans, as well as Traditional IRAs and IRA-based plans, such as SEPs, SARSEPs, and SIMPLE IRAs. However, RMDs aren't required for Roth IRAs while the owner is still alive.

Beginning in 2023, the SECURE 2.0 Act raised the age that you must begin taking RMDs to age 73. If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024. Notice 2023-23PDF permits financial institutions to notify IRA owners no later than April 28, 2023, that no RMD is required for 2023.

If you reach age 73 in 2023, you were 72 in 2022 and subject to the age 72 RMD rule in effect for 2022. If you reach age 72 in 2022,

• Your first RMD is due by April 1, 2023, based on your account balance on December 31, 2021, and
• Your second RMD is due by December 31, 2023, based on your account balance on December 31, 2022.

Your 1099-R issuer is required to follow RMD rules and regulations, so if you received a distribution and you're at least 72 years young, you can be almost certain you received an RMD. Check with your plan administrator if you're still not sure.

I hope you find this information helpful!

Connie

[garymoresi]

I appreciate your basic information provided. So for me specifically, I will turn 73 in 2026 so I will be required to have a RMD by April 1st of 2027. Correct?

However, the IRS requirements state:

• 401(k), profit-sharing, 403(b), or other defined contribution plan
  Generally, April 1 following the later of the calendar year in which you:
  • reach age 72 (73 if you reach age 72 after Dec. 31, 2022), or
  • retire (if your plan allows this).

Does the bullet point stating "or retire " indicate a requirement of RMD upon leaving my employment (retire)?

[conniem123]

Correct;  if you retire by December 31, 2026, your first RMD will need to be taken by April 1, 2027, for the 2026 year.  Your second RMD is due on December 31, 2027, for 2027 (based on December 31, 2026, balance).  Subsequent RMDs are due on December 31st annually thereafter.

You need to refer to the plan documents with your employer, as it may require you to begin receiving distributions after you reach age 73, even if you’re still employed.

Keep in mind these are the tax laws as of today, and are always changing and could very possibly change prior to 2026.

I hope this is helpful!

Connie

[garymoresi]

I'm not sure we are understanding each other. Your responses do not appear to answer my questions. Let me try again. I stopped working 01/27/17 at age 64. I will not turn 73 until 03/02/26. When did I retire?

The IRS rules state:

• 401(k), profit-sharing, 403(b), or other defined contribution plan
  Generally, April 1 following the later of the calendar year in which you:
  • reach age 72 (73 if you reach age 72 after Dec. 31, 2022), or
  • retire (if your plan allows this).

I read these rule as two separate bullet points, either age 72 or retire. Since I stopped work at on 01/27/17 at age 64 should I have begun RMD at that time?

[conniem123 · Accepted solution]

To clarify, it is the later of the two separate bullet points, not either.   In your case the later date would be April 1, 2027.  The second bullet point refers to plans that do not require RMD upon retirement, and thus can take the later date.

I hope this answers your question.

Connie