Still working 71 yrs old, has a 401K that he contributes $8500 to, the RMD is $11500 from the 401K acct, does he have to withdraw the $3,000 to satisfy the requirement? In other words does the contribution have to equal the RMD amount for the account?
tks all
This sounds as tho the 401K in question belongs to his current employer. As such, as long as he does not own 5% of the company, he is not required to take an RMD until he either retires or terminates his employment.
Let us say, that the 401K is not from the same employer or he owns at least 5% of the company of the same employer, then he is required to take his RMD. The RMD would be computed on the plan balance as of the prior 12/31. He would have to take the full RMD from that Plan. It does not matter how much he still contributing. There is no netting.
Individuals who are still working past age 70 1/2 and have a 401K from a former employer can avoid having to take an RMD from the former employer plan IF the current employer plan would allow a direct transfer of the other company's plan. The individual would have to take that year's RMD from the other plan, but future year RMDs would not be required as the
401K would now belong to his current employer.
So if TXPYR had an RMD for $15K from 401K acct. Continues to work and now has a pre tax deduction of $1200 for the year, he is not on the hook to make up shortfall of the RMD not being met?
Once again.... If you are asking about a 401K that is with your current employer, the age 70 1/2 requirement for minimum distributions is NOT applicable unless you are a 5% owner of the company.
OK, perfect bypass then, take a small 401K contribution to protect the much larger RMD, sounds like a win then.
I have absolutely no idea what the above statement means.
You are confusing money going in to the 401k "pre tax deduction of $1200 for the year" with money coming out of the 401k "RMD".
Money added to a 401k would increase the RMD not decrease it.
As has been said if all requirements are met there is no RMD this year for the 401k.
You need to provide more detailed information to get the correct answer.
SIMPLIFIED: Txpyr is required to take an $12,500 withdrawal from 401K acct in 2016. However, txpyr is still working for same company and has a $100/month payrolld(addition)deduction for 401K acct. Therefore txpyr doesn't have to withdraw his RMD from the acct. this based on previous posts.
I suspect his point was that it might be worth continuing to make a minimum 401K contribution if by doing so he can delay having to take out the RMD. But I agree that his wording was confusing.
Does he need to make a 401K contribution to delay the RMD, or does just his continuing to work for the same employer associated with his 401K suffice for delaying the RMD?
Steve Geib VITA volunteer
He does not have to be an active participant in the plan. As long as he still works for the same employer and is not a 5% owner, no RMD is required.
Not correct. A person who has attained age 70 1/2 is required to take minimum distributions from an employer 401K no later than April 1 of the following calendar year unless he is still employed by that same employer and is not a 5% owner of the employer.
Whether or not this person is an active participant in any employer plan is irrelevant.
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