In service 401k distribution and RMDs
Client’s birthday is September 1942
That means he turned 70 ½ in March 2013
But he is still working and has a 401k so did NOT take an distribution in 2013. Client has now decided he wants to do an in service distribution of his 401k to an IRA. And knows this will mean that balance will now be included in all RMD calculations.
The question is, IF we roll the 401k to an IRA this year (by March 2014), will he be forced to take TWO distributions (one by April 1 2014 the other by December 31 2014) or because the 401k was in place at the end of 2013 he will only have to take the regular ONE distribution by December 2014.
The second question – from his employer an old retirement plan was put into an Annuity with Prudential years ago. Prudential has already told client he MUST decide his payment by April 1 of 2014 as he can no longer defer this plan due to his age. Client intends to roll as a lump sum to an IRA. Similar questions – does the balance of this annuity have to take TWO distributions in 2014 since he took out nothing in 2013 the year he turned 70.5?
Permalink Submitted by Alan - IRA critic on Wed, 2014-01-22 22:43