Riley participates in his employer's 401 (k) plan. He turns 70 years of age on February 15, 2018, and he plans on retiring on July 1, 2020. When must Riley receive his first distribution from the plan to avoid minimum distribution penalties?

which date is correct

By April 1, 2018.

By April 1, 2020.

By April 1, 2021.

By April 1, 2019.

Question

Business

Armani Newman

12 April, 04:57

Riley participates in his employer's 401 (k) plan. He turns 70 years of age on February 15, 2018, and he plans on retiring on July 1, 2020. When must Riley receive his first distribution from the plan to avoid minimum distribution penalties?

which date is correct

By April 1, 2018.

By April 1, 2020.

By April 1, 2021.

By April 1, 2019.

+4

Answers (1)

Know the Answer?

Emilee Chen · Answer 1

Option 2 is the correct answer.

By April 1, 2020.

Explanation:

To avoid minimum distribution penalties, the taxpayer must receive the first distribution by no later than April 1 of the year after the employee turns 70 % or the year after the year in which employee retires (if later).

Because Riley turns 70 1/2 years of age in 2019, he must receive his first distribution no later than April 1, 2020 to avoid minimum distribution penalties.