Question

Ian retired in June 2018 at the age of 69 (he turned 70 in August 2018). Ian’s retirement account was valued at $555,000 at the end of 2017 and $570,000 at the end of 2018. He has had all of his retirement accounts open for 15 years. What is Ian’s required minimum distribution for 2019 under each of the following alternative scenarios?

1. Ian's retirement account is a traditional 401(k) account.
2. Ian's retirement account is a Roth 401(k) account.
3. Ian's retirement account is a traditional IRA.
4. Ian's retirement account is a Roth IRA.

Answer 1

Requirement a: The tax payer in this case should receive first minimum distribution no later than April 1 2020. The age of tax payer will be 71 years at the end of 2019 and therefore the applicable percentage of minimum distribution mentioned in the IRS Uniform Lifetime Table is 3.77%. The tax payer is required to receive the following minimum distribution for 2019 before April 1 2020.

Particulars	Amount
401(k) account balance at the end of 2018	$570,000
× Applicable percentage from IRS Uniform Lifetime Table	3.77%
Minimum distribution in 2019	$21,489

Requirement b: The minimum distribution is $21,489 as computed in the above traditional 401(k) account because the same requirements are applicable to Roth 401(k).

Requirement c: The minimum distribution is $21,489 as computed in the above traditional 401(k) account because requirements of IRA mirror traditional 401(k).

Requirement d: The minimum distribution is $0 as there are no minimum distribution requirements for Roth IRAs.