Client retired 11/2016 – rolling over 401k 2017
We have a client who will be 70 1/2 in September 2017.
Client retired in November 2016
Client will be rolling over his 401k into his existing IRA in January 2017
will we need to add these r/o funds to his IRA balance to calculate his RMD?
Permalink Submitted by Alan - IRA critic on Fri, 2017-01-13 16:30
No. because the 401k RMD for 2017 will be distributed by the plan and not included in the amount rolled over to the IRA. The IRA RMD for 2018 will reflect the balance including the rollover as of 12/31/2017. The client’s 2017 IRA RMD can be deferred to 4/1/2018 if they wish but the 401k RMD cannot be deferred due to the rollover, which is considered a distribution and requires the RMD to be completed first. Note that if the plan messes up and allows the entire balance to be rolled over, the 401k RMD is still considered completed and taxable, but the IRA will have an excess contribution which must be withdrawn from the IRA.