403(b) RMD Question

[Guest RPSS]

A teacher participated in his employer's 403(b) plan until he separated from service. It was 1996, and the teacher was age 70 then. The teacher then went to work for another employer who also sponsored a 403(b) plan. The teacher did not participate in the new employer's 403(b), nor did he do anything with the previous 403(b) plan. Are the existing 403(b) assets subject to RMD since the teacher severed employment with the employer that sponsored the plan? Or since the teacher has continued to work with a new employer that sponsors a 403(b) (even though he is not participating in it), can he delay RMD until severence of employment with his current employer. I think the former is the case but wanted to get other opinions. Thanks.

[Ellie Lowder]

He/She should have begun RMDs at 70 1/2 because employment with the sponsoring employer was severed. Only way to avoid RMD on assets accumulated with a former employer would be to start a new plan with new employer, then rollover the assets from the 403(b) with the former employer to the 403(b) with the new employer. Or, begin contributions into the former employer account with the new employer which would serve to make that account a part of the new employer's "plan".