RMD options in year of retirement...

[Saving$]

Let's say a person keeps working well after any RMD age, and then retires. Let's use age 80 for this example.
- For any personally held IRA's they would have been required to start taking RMDs at the appropriate age.
- For many employer 401k, 403b and 401a plans, RMDs are not required if actively working.

This person would be required to take RMD's in the year of retirement, as RMDs are required for the calendar year if you are not employed on 12/31.
However, in the year of retirement you are also allowed to delay taking RMDs until 4/1 of the following year. Obviously if you delay taking the full RMD past 12/31 in the calendar year of retirement, you will have 2xRMD's in the following calendar year.

HOWEVER, for a retiree trying to avoid IRMAA in the future (2 years), could that person take a distribution of 80% of the RMD in the year they retire, and then in the year after retirement, take both the other 20% before 4/1, plus the full RMD for the year after retirement? Does anything special need to be done in doing this?

Or is it better (safer, easier, other) to take the full RMD in the year of retirement and then appeal the IRMAA bracket based on income in future years not including any W2 employment as it did in the retirement year?

Do any of the answers differ if it is a 401k vs a 403(b) vs a 401(a)?


Source for above info stated as "fact":
Per https://www.bogleheads.org/wiki/Require ... stribution
1. For Traditional 401(k), 403(b), or 457(b) rank & file employees "RMDs begin the year when: (1) the owner reaches RMD age, or (2) the owner retires from the employer (if the plan permits), whichever is later." Let's assume the plan permits.
2. Further down in the same wiki, it states "First RMD: Those affected by RMDs are allowed to defer their first RMD until April 1 of the following year.[9] This date is referred to as the required beginning date (RBD)."

[ee_guy]

Retiring on Dec 31 (2023) is a tricky date. According to this article, if you work on Jan 1 (2024), there is no RMD for 2023. But if your last day of work is Dec 31, 2023, a RMD is required for 2023.

https://www.kitces.com/blog/still-worki ... ent-owner/

[Saving$]

Retiring on Dec 31 (2023) is a tricky date. According to this article, if you work on Jan 1 (2024), there is no RMD for 2023. But if your last day of work is Dec 31, 2023, a RMD is required for 2023.

https://www.kitces.com/blog/still-worki ... ent-owner/

I must have worded something wrong to elicit this reply. The retirement was long before 12/31/23, but was in 2023. Thus they won't be employed on 12/31/23 and thus 2023 RMD's are required. Question is whether they can be split between 2023 & 2024...

[Eagle33]

I must have worded something wrong to elicit this reply. The retirement was long before 12/31/23, but was in 2023. Thus they won't be employed on 12/31/23 and thus 2023 RMD's are required. Question is whether they can be split between 2023 & 2024...

RMD can be taken all at once or divided into multiple distributions.

[BL]

I think you are asking which of these apply:

1. "You must take your first required minimum distribution for the year in which you reach age 72 (73 if you reach age 72 after Dec. 31, 2022). However, you can delay taking the first RMD until April 1 of the following year."

2. If you have delayed the first RMD due to still working, can you still delay the first year's withdrawal until the next April 1?

[Serendipity]

I must have worded something wrong to elicit this reply. The retirement was long before 12/31/23, but was in 2023. Thus they won't be employed on 12/31/23 and thus 2023 RMD's are required. Question is whether they can be split between 2023 & 2024...

RMD can be taken all at once or divided into multiple distributions.

The 2023 RMD can be split between 2023 and Q1 2024.

[ee_guy]

OP

The title hides the fact that it is a delayed RMD from a 401k - far from the typical RMD situation for a IRA. It may help to clarify your question if you changed the title to "Delayed RMD options in the year of retirement for a 401k" or something to that effect.

In researching this question, which is of interest to me, I found this article that indicates you can indeed delay part of the RMD until April 1 of 2024.

https://www.forbes.com/sites/juliejason ... 129cc121e4

I would feel more confident if this were confirmed by the resident BH expert in this forum.