Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: My client participates in a SEP IRA at a company in which he is not an owner. When must he begin RMDs?
Answer: RMDs must begin at the normal time for those participating in IRA-based qualified plans. That means the first distribution must be taken by April 1 of the year following the calendar year in which the client reaches 70 ½. The next RMD is due by December 31 of the same year, and subsequent RMDs are due by December 31 of each succeeding calendar year.
RMDs must begin at age 70 ½, even if the client is still working at the employer sponsoring the SEP. And if the client is still working while taking RMDs, the employer must keep contributing to the SEP on the client’s behalf—just as the employer is contributing to other employees.
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