Riley participates in his employer's 401(k) plan. He turns 70 years of age on February 15, 2015 and he plans on retiring on July 1, 2017. When must Riley receive his first distribution from the plan to avoid minimum distribution penalties?

Question

Quizplus · Accepted Answer

To avoid minimum distribution penalties, the taxpayer must receive the first distribution by no later than April 1 of the year after which the employee turns 70½ or the year in which the employee retires (if later). Because Riley turns 70½ years of age in 2015, but does not retire until 2017, he must receive his first distribution no later than April 1, 2018 to avoid minimum distribution penalties.

Riley Participates in His Employer's 401(k) Plan