RMD
Hi,
A client who turns 70 1/2 this year has a 401k and is still working. If we wanted to protect some of this asset through an in service withdrawal rolled into an IRA(no other current IRA’s) would there be an RMD due this year and if so what value would that be based on since there is no 12/31/2018 value?
Permalink Submitted by Alan - IRA critic on Wed, 2019-05-01 18:56
If the plan permits an inservice distribution (direct rollover to an IRA), RMDs from the IRA will be commenced starting in the following year (2020) because the “still working” exception does not apply to IRA accounts. The IRA 12/31/2019 balance will be used to determine the 2020 IRA RMD. But as long as client does not retire before the end of 2019, a direct rollover to an IRA can be done without a 2019 401k RMD under the “still working” exception. Of course, this exception does not apply if client is a >5% owner of the company.