RMD Issue
I have a 75 year old client that had an outstanding loan on his 401(k). He initiated a distribution after he left his company in early 2021 to pay off the loan. Next, he rolled over the 401(k) to an IRA. My question is this…does the distribution from his 401(k) that was used to pay off his 401(k) loan count toward his RMD for 2021?
Permalink Submitted by Alan - IRA critic on Fri, 2021-11-05 17:58
This would be an offset distribution and unlike a deemed distribution it does count toward the 401k RMD for 2021. If the distribution exceeds the 2021 RMD, client has until the due date plus extensions for the 2021 return to roll over the excess of the RMD.