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Post by rj1521 on Jan 21, 2011 14:50:59 GMT -5
Hello Tax experts! Financial advisor says RMDs required for IRA at required age even if still employed but if still employed, 401K RMD is not required. Note: employee does not own 5% of the business.But, the language of the law seems to indicate that RMD for both IRA and 401K is required in the year of age 70 ½ or the year when person retires, unless account owner owns 5% of the business. What am I missing? Thanks. www.irs.gov/retirement/article/0,,id=96989,00.html#1 What are Required Minimum Distributions? Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 70 ½, regardless of whether he or she is retired. What types of retirement plans require minimum distributions? The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. The RMD rules also apply to Roth 401(k) accounts. However, the RMD rules do not apply to Roth IRAs while the owner is alive. www.law.cornell.edu/uscode/search/display.html?terms=Required%20minimum%20distribution&url=/uscode/html/uscode26/usc_sec_26_00000401----000-.html§401(a)(9)©(i)(I)(II) (C) Required beginning date.— For purposes of this paragraph— (i) In general.— The term “required beginning date” means April 1 of the calendar year following the later of— (I) the calendar year in which the employee attains age 701/2, or (II) the calendar year in which the employee retires. |
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