First RMD Working After Age 72

Submitted by Marc Usem on Mon, 2022-06-13 03:28

A client delayed their 401k RMD by still working and retired at age 73 mid-year. Their first RMD is required for the current year. Do they need to keep their assets in the employer’s 401k plan to delay their first year RMD until April 1 of the following year, or can they roll over their 401k to an IRA and still delay their RMD until April of the following year?



Submitted by Alan - IRA critic on Mon, 2022-06-13 04:18

  • If they wish to delay the 401k 2022 RMD until as late as 4/1/2023, they cannot roll the plan over this year. And if they delay the IRA direct rollover until next year, then both the 2022 and 2023 RMDs will have to be distributed on or before the rollover date. 
  • If there is any NUA potential in this plan, the LSD could be postponed until 2023 if no distribution is taken this year, and the cost basis and NUA total may cover two years of the RMDs referenced above. While this would be efficient, it still is not worth it unless the cost basis of any such shares is low enough as a % of their total value.
  • The amount of 2022 salary income should be considered along with the amount of the RMDs to determine whether deferral or taking the 2022 RMD this year is the best choice. 


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