RMD from Employer Plan vs. IRA
Is there any difference in how the income is taxed on RMD funds taken from an employer plan such as a 401(k) vs. taking the RMD from an IRA? Is there a benefit to taking the RMD from an IRA rather than a 401(k) plan?
Is there any difference in how the income is taxed on RMD funds taken from an employer plan such as a 401(k) vs. taking the RMD from an IRA? Is there a benefit to taking the RMD from an IRA rather than a 401(k) plan?
Permalink Submitted by mk foss on Wed, 2008-11-12 17:14
There is no difference in how an RMD from a 401(k) is taxed vs how an IRA is taxed. Both are ordinary income with the remote possibility of some basis recovery.
If someone has both an IRA and a 401(k), they must take RMDs from both accounts. All IRAs can be grouped in determining RMDs but each qualified plan (like a 401(k)) stands alone.