401(k) to IR r/o RMD
participant, 72 rolled his entire 401(k) into an IRA earlier this year
Unfortunately an RMD was not taken from the 401(k) prior to the rollover
Question(s)
What is the proper correction method?
I would assume the amount of the RMD needs to be taken from the IRA plus any earnings
How exactly would this be reported on 1099?
Thank You
Permalink Submitted by Alan - IRA critic on Thu, 2014-08-28 20:03
Assuming participant was required to take an RMD from the 401k, any rollover still satisfies the RMD. However, the amount of the RMD was not eligible for rollover and now must be treated as an excess regular IRA contribution, which is corrected in the usual manner with earnings on this amount in the IRA being distributed in the corrective distribution. The 1099R from the 401k would show a direct rollover coded G, but participant should only report the allowed rollover on the tax return on line 16a and 16b. The RMD amount would be taxable on 16b. The 1099R for the corrective distribution from the IRA will be issued in the usual manner showing only the earnings as taxable. This would be reported on lines 15a and 15b of Form 1040. Participant should explain all this on an explanatory statement with the return. This will cost very little in taxes, but is somewhat difficult to report because the reporting as described above does not reflect the 1099R from the 401k plan which shows a full direct rollover.