RMD FROM 401k

Submitted by Gil Shifrin on Wed, 2015-04-15 17:24

In 2017 I will be 70 1/2 years old. At the end of 2016 I will have approximately 900,000 in IRA and 600,000 in a 401K.
Early in 2017 I will rollover 100,000 of 401K to an IRA account. I will move the other 500,000, which is company stock, to a taxable account in 2017.

Since I am require to withdraw around 3.6% of the 600,000 (401k) for RMD in 2017, does the moving of the 401K company stock to a taxable account meet this requirement? Or do I need to withdraw monies from the the 401k that was rolled over to the IRA?



Submitted by Alan - IRA critic on Wed, 2015-04-15 18:13

  • The distribution of company stock counts toward your RMD, both the cost basis portion and the NUA portion. Therefore, in doing the LSD, your RMD will be more than satisfied.
  • In fact, you might consider doing the LSD in early 2018. Your RBD is 4/1/2018 so there is no requirement to take any distribution in 2017. But your company share value is plenty high enough to satisfy both your 2017 and 2018 RMDs if you postpone the LSD until early 2018. This will also keep the 100k out of your IRA another year, so your IRA RMD will also be lower in 2018.  That said, with a diversification challenge due to all this company stock, you might perceive a greater need to sell it sooner rather than later. In that case, tax savings and tax deferral would become secondary considerations. I assume you will be retirred from this company by 2017. If not, please advise.


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