Adjusting MRD for In Service Rolls
The client is 73 and still working. We rolled money from his 401K into his IRA in October of 2006. In calculating the MRD for 2006, should we have added the value of the in-service transfer to the 12/31/05 IRA market value? Would the answer to that question depend upon whether the client had recognized his 401K value a/o 12/31/05 and taken a separate MRD on that pool?
Permalink Submitted by Alan Spross on Wed, 2007-11-28 21:00
If the 401k is the plan of the current employer, then the 2006 IRA RMD does not have to be adjusted for the rolled funds. However, if the 401k plan was that of a prior employer, then the 2006 plan RMD was not eligible to be rolled over to the IRA, and constitutes an excess contribution to the IRA that must be corrected.