IRA Rollover and RMD
A 73 year old just retired from work and he has about 4k in a company profit sharing plan of which he is not an owner. He wants to roll these dollars into his IRA, but we don’t want to move any of those dollars if the RMD has to be taken first. Can he roll the entire account now and then take care of the RMD by 12/31/11 since his required beginning date for those dollars is technically 4/1/12, or does he first have to have the TPA calculate and distribute his RMD now and then upon its completion we can execute the direct rollover?
Thank you!
Permalink Submitted by Alan Spross on Mon, 2011-10-17 22:11
The RMD for 2011 has to come out before the rollover because even though the RBD is not until 2012, 2011 is still a distribution year because he separated from service prior to the end of 2011.
If the rollover is postponed until 2012, then both the 2011 and the 2012 RMDs must be distributed before the rollover.
Sometimes errors are made and the full balance gets rolled over, but this creates an excess contribution to the IRA because the plan RMD is deemed distributed and then contributed to the IRA as an excess contribution that needs to be corrected.
4k as a plan balance will create a very small RMD for 2011.