I’ll be 73 this year and will take my first required minimum distribution (RMD) by Dec. 31. I’m still working. I have an IRA, an active 401(k) plan and an active Voluntary Defined Contribution (VDC) retirement plan, which is state-sponsored. My questions are: Must I take an RMD only from the IRA, or from all three? How do I take the RMD? Is there a special tax form? And how does the Internal Revenue Service know if I’ve taken the required distribution amount?  

You must take an RMD from your IRA. Whether or not you also have to take RMDs from your two employer-sponsored plans depends on their rules.

Federal law says you don’t have to take an RMD from your current employer’s retirement plan unless you own 5% or more of the company that employs you. However, retirement plans can impose stricter rules. Ask your plan administrators whether they let current employees opt out of taking RMDs. If not, you must calculate the correct 2024 RMD for each of these plans separately, based on their respective 2023 year-end balances.

To calculate an RMD, divide your retirement account’s previous year-end balance by your life expectancy factor, which you’ll find in the Uniform Lifetime Table in IRS Publication 590-B. At age 73, it’s 26.5. If your 2023 year-end IRA balance was $100,000, for example, and you divide it by 26.5, your RMD would be $3,774. There’s no form to fill out. Just take the distribution.

How does the IRS know you’ve taken the correct amount? Your IRA custodian has reported the RMD on Form 5498, along with the RMD date and the value of the account. The IRS compares that information with your tax return, where you must report IRA distributions as income.

The bottom line:

Employers may let a current worker who has reached the age for taking RMDs to opt out until retirement, but they are not required to do so.

More information:

bit.ly/IRAhelpstillworkingexception

bit.ly/IRSrmdcomparisonchart

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