Rollovers and RMDs
Client has a 401(k) plan and is still working at age 75. She is going to separate from service this year, making her RBD for the 401(k) April 1, 2016. If she rolls over to an IRA prior to her RBD, does she have to take an RMD from the 401(k) prior to rollover? Thanks for any help with this.
Permalink Submitted by Alan - IRA critic on Tue, 2015-01-06 17:12
Yes, once she retires the current year becomes an RMD distribution year for the plan. Any distribution or rollover requires that the RMD be satisfied prior to or at the same time as the rollover and the RMD portion cannot be rolled over. If she waits for the RBD to take the first RMD and do the rollover, it will be the second RMD distribution year, and both year’s RMDs will have to be satisfied. Finally, if she did a rollover while still working and then retired in the same year, the RMD would be applied to the rollover funds and an excess IRA contribution would be created up the amount of the RMD.