Rolling IRA’s into 401(k) to Avoid RMD
I have a client with several IRA accounts in addition to a 401(k) plan for a company which he is still working for. He is turning 70 1/2 this year and would like to transfer his IRA accounts into the 401(k) plan with his current employer to avoid having to take his RMD’s from the IRA’s. Is this possible?
Permalink Submitted by Jose Morales on Thu, 2015-04-16 20:09
If he is turning 70 1/2 this year then it’s too late to avoid the RMD due for this year, as that amount will not be eligible for rollover to any other retirement plan. Whether he can rollover the amounts other than required to be distributed would mostly depened on the 401K plan itself and which types of direct rollovers into the plan they allow. You should check with the plan administrator to see if the plan documents would allow the direct rollover from an IRA, and what if any restrictions may apply.
Permalink Submitted by Saleah Hewitt on Tue, 2015-04-21 20:04
Thank you Alan! Just to be clear, the client is turnign 70 1/2 this year. If the client had rolled the IRA’s into the 401(k) plan for the company which he is actively employed by before December 31st, 2014 (assuming the plan allowed this) would he be off the hook for having to take RMD’s from that qualified money in 2015? Thank you! Saleah
Permalink Submitted by Alan - IRA critic on Tue, 2015-04-21 20:12
I did not post the response you referred to, but you are correct that the rollover would have had to be done before 2015 in order to avoid a 2015 IRA RMD. But after taking the 2015 IRA RMD, the rollover could still be used to delay future RMDs until client retires.
Permalink Submitted by Saleah Hewitt on Wed, 2015-04-22 22:30
Very good to know, thanks again Alan!