401k rmd
client had a 401k from a previous employer. He found new employment and rolled his 401k into
the new employers 401k plan. He is 71 and works full time with the new employer.
Must he take a RMD from the 401k IN 2010.
MARTY
client had a 401k from a previous employer. He found new employment and rolled his 401k into
the new employers 401k plan. He is 71 and works full time with the new employer.
Must he take a RMD from the 401k IN 2010.
MARTY
Permalink Submitted by Anonymous (not verified) on Thu, 2010-11-04 16:55
The key issue is when he turned 70 1/2. If he had a old 401K and turned 70 1/2, he must take an RMD by April 1 of the year following 70 1/2. Prior to rolling money to a new 401K he must take his RMD. If he failed to due that he must take it out as an excess from the new (current) 401K.
If he rolled into the new 401K prior to the year he turned 70 1/2, he is OK. RMD will not be due on that “pot” of money until the year he retires from it.
pko
Permalink Submitted by Anonymous (not verified) on Tue, 2010-11-09 15:05
MKAMINSKY I replied to you with a private message. Not sure, if you checked lately.
pko
Permalink Submitted by John Clark on Wed, 2010-11-10 15:47
Also check company ownership. THis matters. If the emplyee is also an owner of the company he must take RMDs. This stops people from setting up qualified plans and delaying RMDs indefinantly.
Permalink Submitted by John Lugauer on Mon, 2010-11-15 20:46
Similar to this questions. If a 75 year old is retiring from his main company by 12/31/2010, and wants to roll over his 401k to his solo401K that he is 1/2 owner with his daughter….
1. Would he need to take an RMD by April 2011?
2. Would the solo401K require a RMD each year because of his ownership?
Thanks
Permalink Submitted by Alan Spross on Mon, 2010-11-15 20:59
1) If he separates from service in 2010, then 2010 becomes an RMD distribution year. While that RMD is not delinquent until 4/1/2011, if he does a transfer or rollover out of the plan, the RMD MUST be distributed at that time. The amount of the 2010 RMD cannot be rolled over.
2) Yes, because he is a 5% or greater owner of that firm. This means that he does not defer any RMDs by doing the rollover. Unless the solo K firm allows loans from the plan and he wants that benefit, he might as well roll the first plan to an IRA instead.
If he separates in January instead of this year, the RMD from the main company for 2010 is avoided. But he would still need to take his 2011 RMD at the time of any rollover out of that plan. If he did not do a rollover, the 2011 RMD could be deferred until 4/1/2012, but if deferred to the second year, there will be two RMDs due in that second year.