2) the calendar year in which the participant severs employment, whichever is later.
As I said in my first post: The plan rules for employer plans can make exceptions to RMD requirements for those who are still employed by the company. and suggested that you need to check with your administrator to see if they have that exception.
When I terminate, I am eligible for a distribution from my ESOP but am not required to take it. I can leave the account with my now ex employer and let it grow tax deferred from ongoing investment gains. Starting the RMD upon termination ensures uncle sugar gets his slice even if I let it ride for a while post termination.
Well, you will be required to take an RMD when you terminate, so let me correct that statement:
Once you terminate, you are allowed to take distributions, but are not required to do so unless you have reached the age where an RMD is required.
This clears up much of the confusion I initially had… That said, if I did let it ride, I don’t think my plan would allow me to take just a little distribution each year to cover the RMD. It would be either all at once or as 20% each year spread over five years.
Yes, that would depend on the plan rules. Plans can have different distribution rules.
I wouldn’t let it ride anyway. When I terminate, I will do a 100% rollover to my TIRA and then cover the RMD’s within the TIRA framework.
If you are over 72 when you terminate, you will likely have to take a distribution from the ESOP before it can be rolled over into your IRA. As I said in my first post: If you try to roll over your ESOP into an IRA after the account valuation that the RMD was based on has been determined but before your take the RMD for the year, your administrator will likely require you to take the RMD before it does the rollover.
My issue was erroneously thinking I somehow had to take RMD’s from the ESOP pre-termination.
You still need to confirm that your particular plan has that waiver. Just because the plan is allowed to have that waiver doesn’t mean that they necessarily do. And they may have specific work requirements, like you have to work for x number of hours/days for the year for the RMD to be waived. Again - I would suggest that you check your plan rules and/or check with the administrator.