rollover for 5% owner of company

Submitted by Michael Porfido on Wed, 2017-12-20 17:53

Just want to confirm… I have a client who is a 5% owner of a company and is 77 yrs old. He has taken his RMD for 2017 based on his profit sharing and 401(k) balance as of the end of the last plan year ending 10/31/16.
Now we would like to rollover his remaining balance into his IRA. We do not need to take another RMD from the profit sharing and 401(k) before we do the rollover. Correct?



Submitted by Alan - IRA critic on Wed, 2017-12-20 20:03

  • If there was any distributions or contributions to the plan between 10/31/2016 and 12/31/2016 then the 10/31 value should be adjusted for the 2017 RMD calculation. Once that RMD is complete, the rest of the plan can be rolled to an IRA before 12/31/2017, although time is running short to get that done.
  • I assume that client was a greater than 5% owner in the plan year ending in the year he reached 70.5, because that is the applicable year for determining ownership for RMD purposes and ownership % in other years is immaterial. And ownership of exactly 5% does not trigger RMDs, as it takes more than 5% even.

Add new comment

Log in or register to post comments