“Talk about being shocked.
I am working full-time and contribute to the 401(k). I turned 70 ½ in January and HR said they are sending me an RMD. I explained to them that I didn’t want it and the IRS doesn’t require it. They explained that this is ‘what they do.’
Is this legal?
What can I do about it?”
Sadly, this is legal.
However, according to the IRS these are not technically RMDs since they are not mandated by the IRS but are rather policies of the 401(k) plan administrator. So you do have some options.
First, you could/should ask your H/R department to get out of the stone ages and changes their policies to reflect the IRS regs. You are certainly not the only employee this affects. It’s no skin off their nose if they change the policy. Any reasonable person would. If you wish some assistance with your request, please let us know. We’ve had some very good success working the companies (both the owners directly and the H/R departments) in bringing the quality of both their policies and their investment menus up to an excellent standard to benefit their employees.
Second, you can roll these distributions over into an IRA outside the 401(k). This will prevent the distributions from being taxable in the year you receive them. However, this addition to your IRA will increase the RMDs you do have to take from your IRA.
If none of this works for you and you like your work and continue to add to your 401(k) then simply accept the situation as it is. And rock on.
If you have questions or comments, please send them to [email protected]