Will a qualified plan distribution satisfy an IRA RMD?
A client of mine who turned 70 1/2 this year rolled over his 401(k) to an IRA. The plan distributed his after-tax contributions to him, which ended up being $5,000 more than the plan’s RMD. He has several other IRA’s with a RMD of $3,000. Can the $5,000 excess from the 401(k) go towards satisfying the IRA RMD? I know qualified plans cannot be aggregated for RMD purposes like IRA’s and that an IRA distribution will not satisfy a qualified plan RMD…but I was hoping it may work the other way around. Wishful thinking?
Thank you in advance.
Permalink Submitted by Alan Spross on Thu, 2007-11-29 21:39
Yup, wishful thinking.
Not that this would affect the current year IRA RMD, but any excess over the actual 401k RMD could be rolled over to the IRA (60 days if not expired), and an 8606 filed to report the added IRA basis. This is probably not worth the trouble if the client has no basis at present in his TIRA, because it will subject him to the 8606 calculation indefinitely. However, it would replace some of the funds coming out of the IRA for the RMD.
Permalink Submitted by Anonymous (not verified) on Thu, 2007-11-29 21:57
Oh well, I thought I would give it a try.
The 60 day window is up, but he has no basis in his IRA so I don’t think it would have been worth the effort anyway.
Thanks for your reply!