Combining RMD from 401k and IRA
Client has 760K in IRA and 240K in 401k. Turning 70 in a couple years and wants to leave IRA untouched for awhile because he likes the account. Can he take the RMD based on lets say the 1M all from the 401k pension plan? I’ve been told no but with no backup why. Thanks
Permalink Submitted by Alan Spross on Fri, 2012-07-06 17:07
RMDs must be satisfied separately for all 401k plans per following Q 1 of IRS Reg 1.401a(9)-8:
>>>>>>>>>>>>>>
Q–1. What distribution rules apply if an employee is a participant in more than one plan?
A–1. If an employee is a participant in more than one plan, the plans in which the employee participates are not permitted to be aggregated for purposes of testing whether the distribution requirements of section 401(a)(9) are met. The distribution of the benefit of the employee under each plan must separately meet the requirements of section 401(a)(9). For this purpose, a plan described in section 414(k) is treated as two separate plans, a defined contribution plan to the extent benefits are based on an individual account and a defined benefit plan with respect to the remaining benefits.
>>>>>>>>>>>>>>
If client has more than one IRA account, he can aggregate his RMD in any combination from those IRA accounts, but a 401k and IRA account cannot be aggregated with each other.