I’m 75 and still working. What happens to my retirement plans? Q. I am 75 years old and a long-time full-time employee and a participant in my employer’s 401(k) plan. I am aware that as a non-owner, as long as I remain employed, I may continue to contribute to my 401(k) and I am not required to take any Required Minimum Distribution (RMD). I plan to keep working through the end of this year, which I understand means I will not be required to take a RMD for 2021 in 2022. If I decide to retire sometime during 2022, is there a particular date I can work until that leaves me eligible not to take the RMD for 2022? And if I can arrange to remain employed on a part-time basis, what would allow me to avoid taking the RMD?
— Still working
A. The rules surrounding Required Minimum Distributions (RMDs) can be complicated.
As you know, 401(k) plans, like IRAs, are subject to RMD rules.
These rules dictate that once you reach the age of 72 — or 70½ if born before July 1, 1949 — you must begin to withdraw money out of these tax advantaged accounts, said Laurie Wolfe, a certified financial planner and certified public accountant with Peapack Private Wealth Management in New Providence.
She said the withdrawal rate is based on your age and life expectancy, as defined by the IRS.
“The penalty for not taking a required distribution is 50% of the required amount – ouch,” she said. “It’s very important that you get this right.”
Participants in workplace retirement plans who are still working usually can, if their plan allows, wait until April 1 of the year after they retire to start taking distributions from these plans, she said, noting this is not true for IRAs.
“The first RMD must be taken by April 1st of the later of the year after you turn 72, or the year after you retire,” Wolfe said. “Your second RMD however, must be taken by Dec. 31 of that second year.”
So it could be that you are taking two RMDs in that second year, she said.
Wolfe recommends careful tax planning to determine whether you should instead take that first RMD by the end of the first year — the later of the year you either turn 72 or retire — so you don’t have this doubling up in one year.
To qualify not to take the RMD because you are still working, you must make sure you work at least one day in the following year, she said.
“If you retire on Dec. 31, 2022, even if you work a full day on that day, then 2022 will be considered the year you retire,” Wolfe said. “You must be employed for some part of 2023, even if it is one day, to be considered still working in 2022.”
The answer to your second question is not as clear cut, Wolfe said. That’s because the IRS has not defined what would be considered “still working” or “retired” for this purpose.
However, she said, it is widely interpreted that if the employer and the definitions in the employer’s retirement plan consider the person to be employed, then a person would qualify for the “still working” exception to the RMD rules.
For example, she said, the plan documents may say that you must work “X” number of hours per week to qualify to participate in the plan. If you don’t meet that qualification, the IRS may find that you are not “still employed” and you would be subject to the RMD rules.
“Additionally, if you change your category of work from employee to independent contractor, you would not be considered still employed for this purpose,” she said. “The penalty is a steep one and as always, I would advise you to consult with a tax professional.
A state grand jury voted not to criminally charge the Trenton police officers who killed a man after he threatened to shoot the officers and pointed an airsoft gun at them during a 2019 confrontation at his city home, officials said Tuesday.
Grand jurors found the actions of the officers to be justified in the shooting death of 42-year-old Jason Williams after deliberations ended Monday, according to the New Jersey Attorney General’s Office.
Meanwhile, an attorney for the Williams family, John Zidziunas, said officers acted “recklessly” and did not try to deescalate the incident.
In announcing that no charges would be filed, state officials released more information on the circumstances surrounding the March 14, 2019 shooting. The attorney general’s Office of Public Integrity and Accountability investigated the killing, as required by state law.
Trenton Police Officers Yusuf Addar and Bryan Kirk responded to an unspecified call at Williams’ home in the 600 block of North Olden Avenue in the city around 7:20 p.m., according to a statement from the attorney general’s office. That initial call was “resolved,” the office said.
Later that night, city police received two separate 911 calls around 10:45 p.m. that reported Williams “was suicidal or threatening to harm himself in his home,” according to the account released by the attorney general’s office.
City police officers Nicolas Hogan and Daniel Piotrowski responded to the scene, the office said. Officers Addar and Kirk – who interacted with Williams earlier – heard the report and also returned to the residence for the call.
Officers knocked on the door and Williams responded through the closed door, saying “If you come in here, I’ll shoot you,” the statement said.
“Concerned for Mr. Williams’ safety, officers opened the door to check on him. They were met by Mr. Williams, who was pointing what appeared to be a firearm at them and yelling, ‘I told you.’” according to the attorney general’s office statement.
“Officers gave commands for Mr. Williams to drop the apparent gun, but he did not comply. Two officers, Addar and Hogan, fired their service weapons and fatally wounded Mr. Williams,” the office’s statement said.
Williams died later that night at a local hospital, according to the statement.
“Police recovered from the scene the item brandished by Mr. Williams, which was later determined to be an airsoft gun,” the attorney general’s office said.
“After considering the facts, evidence, and testimony from the OPIA investigation, the state grand jury found the actions of the officers were justified,” the attorney general’s office said. “Under New Jersey law, an officer may use deadly force when the officer reasonably believes it is immediately necessary to protect an officer or another person from imminent danger of death or serious bodily harm.”
Williams’ family earlier this year filed a federal civil rights lawsuit, which alleged police acted recklessly when dealing with a person in a mental health crisis. Officers fired 17 shots, including nine that struck Williams, the lawsuit said.
Two relatives reported that Williams, who long suffered from mental health issues and was earlier released from a mental health facility, was suicidal following a domestic dispute with his girlfriend, according to the lawsuit.
Attorney John Zidziunas, who represents the family, said the attorney general’s release supported his claim that police were reckless.
“All of this completely ignores the simple fact that these officers had a choice and could have chosen to not open the door, call a negotiator, and attempt to de-escalate the situation and talk him safely out of his own home,” Zidziunas wrote in an email. “The [attorney general’s office] press release confirms these officers acted recklessly knowing Mr. Williams was suicidal and threatening ‘to shoot them,’ and yet they immediately opened the door to his home and caused what was clearly a predictable outcome.”
“These officers ensured Mr. Williams’ death when they opened the door knowing he had a gun as he told them, and that they would have to use their weapons,” he added. “Our civil suit against the City and these police officers continues and will prove excessive force was unequivocally used.” Spokespeople for the city and police department did not immediately return a message seeking comment Tuesday night.