RMD Questions Related to 457(b) Plans

Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations.

I read your Ask the Experts column on the recent changes to retirement plan required minimum distribution (RMD) rules. I have a few more questions related to 457(b) plans.

“I turned 70.5 in 2019, but am still working and have an active governmental 457(b) plan. Do the changes to the RMD rules apply to me? Also, I have two other inactive qualified retirement plan accounts that I did not rollover to the active 457(b) plan. Are they inactive qualified retirement plan accounts subject to the RMD requirements in 2021 and exempt in 2020? Also, can I roll my remaining qualified retirement accounts into my active 457(b) to delay RMDs until I eventually retire?”

Charles Filips, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

Thank you for your questions! The reason we did not address your questions in that column is that Q&A was only meant to address legislative changes to the rule, and your particular situation was NOT changed by the legislation. Since you are still working for the employer sponsoring your 457(b), you will not need to take your initial minimum required distribution from that plan until April 1 following the year in which you retire from that employer.

As for your prior employers, as you stated, your assets in those plans would normally be subject to the RMD rules for 2020, since you no longer work for those employers. However, as you indicated, these requirements are waived for 2020. Thus, if you took your initial minimum distribution from your qualified plans prior to 2020, your next RMD will not be due for those plans until December 31, 2021.

And, as you stated, you could roll the remaining qualified retirement plan accounts into your active 457(b) to delay RMDs on those amounts until you eventually retire, provided that your current 457(b) plan will accept such rollovers. We discussed this in a prior Ask the Experts column (Note: This is a feature unique to GOVERNMENTAL 457(b) plans; private tax-exempt 457(b) plans do not benefit from this provision). However, you should complete these rollovers prior to the end of 2020, since your 2021 RMD for these plans will NOT be eligible for rollover. Thus, if you delayed these rollovers until 2021, you would only be able to roll over your account balances LESS the 2021 RMD from these prior employer plans.


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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