Ask the Expert: Can I pause RMDs from retirement accounts?
I'm 76 years old. I have a 403(b) plan, and I still work part time at the job where I contributed to the 403(b). I've been taking required minimum distributions since I was 72. This year, I'd prefer not to take the RMD. Since I'm still working, can I skip this year's RMD? Or must I still take it because I've started to take RMDs?
The answer really depends on your employer's plan.
Federal law says you don’t have to take RMDs from a 403(b) or 401(k) plan sponsored by your current employer until you leave the job, regardless of your age, unless you own more than 5% of the company you work for. This is known as the "still working" exception to the RMD start date. (Readers take note: This exception doesn't apply to individual retirement accounts, or to workplace retirement plans not sponsored by your current employer.)
But the law also lets plan sponsors impose stricter rules. Your plan may not allow current employees who reach their required beginning date to opt out of taking RMDs.
Assuming the plan does allow that option, you should be able to skip taking a distribution. If you’re not yet subject to RMDs because you still work for the plan sponsor, then the distributions you took weren't RMDs, explains Ed Slott, a Rockville Centre tax accountant. They were voluntary distributions, which you can presumably stop taking if you wish.
But you may encounter another problem, he adds. "The plan might treat your having taken distribution in the past as having elected out of the ‘still working’ exception. Some plans don't want to administer a revolving door, where employees start taking distributions, and then stop and start again.”
Employer-sponsored retirement plans don't always give plan participants all the options the law allows.
I'm 76 years old. I have a 403(b) plan, and I still work part time at the job where I contributed to the 403(b). I've been taking required minimum distributions since I was 72. This year, I'd prefer not to take the RMD. Since I'm still working, can I skip this year's RMD? Or must I still take it because I've started to take RMDs?
The answer really depends on your employer's plan.
Federal law says you don’t have to take RMDs from a 403(b) or 401(k) plan sponsored by your current employer until you leave the job, regardless of your age, unless you own more than 5% of the company you work for. This is known as the "still working" exception to the RMD start date. (Readers take note: This exception doesn't apply to individual retirement accounts, or to workplace retirement plans not sponsored by your current employer.)
But the law also lets plan sponsors impose stricter rules. Your plan may not allow current employees who reach their required beginning date to opt out of taking RMDs.
Assuming the plan does allow that option, you should be able to skip taking a distribution. If you’re not yet subject to RMDs because you still work for the plan sponsor, then the distributions you took weren't RMDs, explains Ed Slott, a Rockville Centre tax accountant. They were voluntary distributions, which you can presumably stop taking if you wish.
But you may encounter another problem, he adds. "The plan might treat your having taken distribution in the past as having elected out of the ‘still working’ exception. Some plans don't want to administer a revolving door, where employees start taking distributions, and then stop and start again.”
The bottom line
Employer-sponsored retirement plans don't always give plan participants all the options the law allows.