401(k) Rollover after 70 1/2
If a person rolled over a 401(k) to an IRA in April of this year can that same person take their RMD withdrawal from the Rollover IRA rather than their other Tradition IRA’s?
If a person rolled over a 401(k) to an IRA in April of this year can that same person take their RMD withdrawal from the Rollover IRA rather than their other Tradition IRA’s?
Permalink Submitted by Alan - IRA critic on Sat, 2018-12-15 23:38
When did this person separate from service?
Permalink Submitted by Louis C. Goeckel on Sun, 2018-12-16 03:02
Feb 2018
Permalink Submitted by Alan - IRA critic on Sun, 2018-12-16 16:52
There are two RMDs. The 401k plan should have distributed the 401k RMD and not included it in the IRA rollover. If that was not done, there was an excess IRA contribution made to the extent of the 401k RMD. With respect to IRA RMDs for 2018, these are calculated from the IRA balances on 12/31/2017. The IRA RMDs can be taken in any combination of the current IRA accounts, therefore the entire IRA RMD can be taken from the rollover IRA account if desired.
Permalink Submitted by Victor Ray on Tue, 2018-12-18 22:17
My mom is considering the IRA–>401k rollover to avoid RMDs as she is still working as a doctor in NYC at the age of 80+.Here is the sequence of events:1. She has an IRA and 401k plans2. Her husband dies and she rolls over his IRA into hers3. Something happens to her 401k plan (I think it ended) and she rolls over the 401k into her IRA4. New plan starts at work (or new administrator, not sure) QUESTION: can she roll over the entire amount of her IRA into the 401k to avoid the RMD? Thanks for your help!
Permalink Submitted by Alan - IRA critic on Wed, 2018-12-19 00:31
If the 401k will accept an IRA rollover, she could do the rollover, but that would not eliminate any 2018 IRA RMD based on a 12/31/2017 balance which would have to be completed prior to the rollover back to the 401k . And since it may be too late to complete a permitted rollover this year, then she would have to take her 2019 IRA RMD before doing the rollover next year. Finally, before proceeding with this rollover better check into any changes the 401k plan might have made that affects the “still working exception”. Be sure that she will remain exempt from 401k RMDs in 2019 and beyond. If she is going to retire anytime next year, there is no sense in doing this since that would trigger 401k RMDs for 2019. In addition, continued deferral of RMDs can backfire for some people by making the RMDs very large but probably not in her case since being an MD in NYC she is probably earning a large salary in relation to even future concentrated RMD amounts.