457 still at work rule

I have a client who is 74 and wants to retire from a State job mid year who has a large 457 plan. His question is that if he retires mid year he will no longer be considered still at work and he will have to take an RMD for 2019. He wants to defer his RMD until 2020. So my question is: Does the still at work rule apply to a calendar year or hours worked that year?



When retiring after 70.5 the year of retirement becomes the first RMD distribution year, but that RMD can be deferred up to 4/1 of the following year.  Each employer can determine the threshold required to meet the “still working” exception for any year and that could come into play for a phased or partial retirement. For a full retirement the employee is obviously not “still working”.  In addition, once RMDs begin for a plan going back to work later on will not stop the RMD requirement.



Add new comment

Log in or register to post comments