401(k) rollover – RMD
interesting scenario –
T-IRA owner, turned 70.5 in 2015
Has opted to defer his 2015 RMD until 4/1/2016
All his IRA assets are invested in some sort of stable value fund – which he doesn’t want to invade – unfortunately he doesn’t have any other IRAs which to take his minimum distribution
The “idea”
Rollover his 401(k) into an IRA in January 2016
use this IRA (IRA Rollover) to satisfy his 2015 and future RMDs
I would think this could work although he is now subjecting himself to a larger RMD due to the IRA Rollover He is not a 5% owner and currently working allowing him to defer his 401k RMD until retirement.
Thoughts?
Thank you
Permalink Submitted by Alan - IRA critic on Wed, 2015-12-16 19:35
That would work, but he would only need to roll over enough to satisfy his 2015 and 2016 IRA RMD while keeping the rest of the 401k intact. This would prevent his IRA RMD from increasing as it would keep most of his 401k value out of the IRA. Of course, if he were to retire before the end of 2016, then the partial rollover would be deemed to have included the 2016 401k RMD and that portion would not be eligible for IRA rollover. That is turn would create an excess IRA contribution which he would have to correct from the stable value assets. Therefore, if there is a chance that he may retire before the end of 2016, then he should make his January IRA partial rollover large enough so that if he has to make an IRA corrective distribution of an IRA excess contribution, it can be done without tapping the stable value funds.