RMD from rolled over 401k at age 75

Individual, age 75, is now working part-time for the same employer (small medical practice) and contributions are no longer being made to the company Profit Sharing Plan and Trust. Two questions: can she continue to defer RMD’s as long as she’s employed and money stays in the plan? (Would this be spelled out in the plan document?) If she rolls the money over to an IRA, when does the first RMD come out, before the transfer, or after, i.e. can the entire amount be rolled over?



The plan description should define “retirement” for purposes of determining the RBD or otherwise being considered an “active employee”. Typically, that would involve the number of hours worked in a designated time period, eg “10 hours a week or more”. This should also be consistent with the number of hours required in order to be eligible to participate in the plan. Once she is considered “retired” according to the definition, that year becomes the first RMD year, although a plan is also allowed to require ALL employees to begin RMDs at 70.5 regardless of working status, although few of them do. Once the employee enters their first RMD distribution year, they must complete their RMD before rolling over the rest of the plan balance. Sometimes an employee who is still actively employed does a full rollover to an IRA, and then decides to retire later in that same year. If this happens, an RMD year is triggered retroactively, the current year RMD is deemed to have been made (taxable), but then contributed to the IRA as an excess regular IRA contribution which must be removed in the usual fashion.

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