Pension Rollover and RMD
A soon-to-be retiree over age 75 wants to rollover his pension to an existing IRA before taking any monthly pension payment.
1. Can he rollover the full amount of the lump sum? I assume his pension payment cannot delayed after retirement from the employer if he chooses pension instead of a rollover to IRA.
2. How is his 2024 RMD calculated? His IRA balance on 12/31/2023 does not include the pension lump sum amount.
3. Are there others he has to be careful about?
Permalink Submitted by Alan - IRA critic on Fri, 2024-05-17 18:20
If he separates from service this year, 2024 will become his first RMD distribution year. Therefore, any direct rollover done this year before the 2024 RMD is completed will include the RMD, but because an RMD is not eligible for rollover the RMD amount will become an excess IRA contribution that must be removed. To avoid this, if he is sure to retire this year, he should complete the RMD for the plan before doing the direct rollover.
The 2024 RMD is based on the pension plan balance on 12/31/2023. The first IRA RMD will be in 2025 using the 12/31/2024 IRA balance.
Permalink Submitted by learner on Tue, 2024-06-11 21:33
If the pension lump sum was $246K on 12/31/2023, 2024 RMD will be $10K. Since the employer is in possession of the pension money, how can he withdraw the RMD? May he rollover the entire lump sum to IRA and withdraw $10K from IRA as 2024 RMD?