Solo 401k Required Minimum Distribution (RMD)
While a solo 401k plan is used to save for retirement, the IRS requires the funds eventually distributed. Once the solo 401k participant reaches age 70 1/2, she will need to start taking annual distributions (i.e., required minimum distributions (RMDs) from her self employed solo 401k plan.
The First Year of RMDs
The IRS is more lenient regarding when the first RMD has to be distributed. Known as the required beginning date (RBD), the solo 401k participant is required to take her first RMD by April 1 following the year she attains age 70 1/2.
In subsequent years, future RMDs must be distributed by 12/31 in order to avoid late distribution penalties.
Balance as of 12/31 For Calculation
The previous year’s December 31 balance is used as the account balance for performing the RMD amount.
The solo 401k participant generally use the the Uniform Lifetime Table to calculate their RMDs. The Joint Life Expectancy Table may be use if both of the following requirements are met.
The First Year of RMDs
The IRS is more lenient regarding when the first RMD has to be distributed. Known as the required beginning date (RBD), the solo 401k participant is required to take her first RMD by April 1 following the year she attains age 70 1/2.
In subsequent years, future RMDs must be distributed by 12/31 in order to avoid late distribution penalties.
Balance as of 12/31 For Calculation
The previous year’s December 31 balance is used as the account balance for performing the RMD amount.
The solo 401k participant generally use the the Uniform Lifetime Table to calculate their RMDs. The Joint Life Expectancy Table may be use if both of the following requirements are met.
- The account owner’s spouse is the only primary beneficiary during the entire year for which the RMD is being calculated.
- The account owner’s spouse is 11 or more years younger than the account owner.