RMD IRA To 401k While Working
If anyone can help with this question, it would be appreciated. If someone turns 70 1/2 in May of this year she obviously does not have to worry about RMD until next year. She also has 2 IRA’s and 1 401k which she actively contributes to. Can we roll the 2 IRA’s to the 401k so that she can avoid RMD while she is still working?
Take care!
Permalink Submitted by Anonymous (not verified) on Thu, 2010-04-15 01:52
Several problems here:
Any distribution from an IRA in the year the owner turns 70 1/2 must first go towards RMD. A rollover to a qualified plan (401(k)) is a distribtution so this scheme will not work.
On the point of “not have to worry about RMD until next year” I would be cautious not to delay until April 1, 2011 and need to take 2 RMDs in 2011 – higher income bracket, possbile higher taxes, etc.).
pko
Permalink Submitted by Alan Spross on Thu, 2010-04-15 02:21
I agree with pko that since 2010 is an RMD distribution year, the IRA RMD must be distributed prior to doing the direct rollover, assuming that the 401k plan will accept such rollovers and she is not a 5% owner. Despite that, the idea should still be viable because it will eliminate IRA RMDs from 2011 until retirement when she may be in a lower tax bracket.
Also, those “active” contributions to the IRA had to end with the 2009 contribution because she is not eligible to contribute to a TIRA in 2010 due to age.