RMD on Pension Rollover
My father turned 70 in January of 2008. He retired in Sept of 2008. Before retiring he took the RMD from his 401(k) as he was preparing to do a direct rollover of the 401 to an IRA. He was a little confused about whether or not he had taken the RMD from the 401 but he double checked and he has.
He also had a pension plan balance that he rolled to the same IRA. He rolled the maximum lump sum available into the IRA and he also receives a monthly check from the pension. The 401(k) money and pension money are now in the same IRA account.
Our question is when does he need to take a RMD on the pension amount that was rolled and how should the RMD be calculated?
Thanks for your advice!
Permalink Submitted by Alan Spross on Tue, 2008-11-11 23:03
The RMD for the pension lump sum should have been withheld from the rollover, just as was properly done by the 401k plan.
Are the monthly pension payments from the exact same account that provided the lump sum, or are the monthly payments coming from an annuity purchased by the pension plan at some point in the past? If the latter, then there is an excess contribution to the IRA in the amount of the lump sum portion balance of 12/31/07 which must be corrected. But if the monthly check came from the same pension account, it may well satisfy the total RMD amount. You may have to get clarification from the pension administrator regarding the set up of the pension plan relative to RMD requirements, since 2008 is an RMD distribution year.
Permalink Submitted by steve harper on Tue, 2008-11-11 23:28
Thank you for the clarification. I hope the pension department is on top of this issue and didn’t allow for excess contributions. I will have my dad contact them to make certain. Thanks again very much for your advice and expertise!!