RMD Retirement Mid-Year

Submitted by Ryan Smith on Fri, 2017-08-11 20:02

I have read a bunch of these threads and still unsure, so here is our client’s situation.
Currently 76 years old, has been working full time, not a 5% owner. Is retiring at the end of August 2017. Has a $400k 401k. Also, has a $200k IRA that he is currently taking RMDs on. The main question is he would like to roll out his 401k to his existing IRA after he retires in 2017. How does this affect his RMDs?
1. Does he have to take an RMD for 2017 on his 401k? If yes is the value just the 12/31/2016 value or is there a calculation to includes 2017 contributions?
2. If he rolls that 401k to his own personal IRA in November of 2017 does he have to take an RMD this year?
3. If he has to take RMDs from the 401k does he have to leave that amount in the 401k and rollover the rest?

Thanks for your great help!



Submitted by Alan - IRA critic on Fri, 2017-08-11 20:29

  1. He could delay his 2017 401k RMD to 4/1/2018, but only if he also delays the IRA rollover until 2018. The 2017 401k RMD is calculated from the 12/31/2016 401k balance.
  2. A 2017 rollover would trigger his 401k RMD in 2017. It will not affect his IRA RMD. 
  3. The 401k administrator must distribute his 2017 at the time of the IRA rollover or before the rollover. The rollover amount would the balance of the 401k.
  4. Note that while he could delay the rollover and push his 401k RMD to 2018, he would then have to take 2 401k RMDs that year. Therefore, there is no way to permanently avoid the 2017 RMD.

Submitted by Ryan Smith on Tue, 2017-08-29 19:40

Thanks for the prior answer.  I’m getting conflicting info from the CPA.  It would appear with the mid-year he does have to take a 2017, but can defer till 4/2018.  He would still have to take a 2018.  Below is the CPA’s response.A person that is in a Qualified Plan; his Required Beginning Date is April 1 of the year following the LATER of the year the individual (1) reaches age 70.5 or (2) retires. So, he does not have to do two years in 2018. 

Submitted by Alan - IRA critic on Tue, 2017-08-29 19:53

He is correct about the RBD, but clearly wrong about how that statement effects the remaining requirements. I wonder how long he thinks the 2018 RMD can be delayed.  Any amount of the 2017 RMD deferred into early 2018 has no effect on when the 2018 RMD must be distributed. While the 2018 RMD can be delayed until 12/31/2018, any IRA rollover done in 2018 will require that the 2018 RMD be distributed at that time. The deferred 2017 RMD must be distributed no later than 4/1/2018 if the IRA rollover is done after that date. 

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