RMD from 401k rolled over to IRA
Individual, age 75, still working, is doing an in-service rollover of his 401k to an IRA. Since he’s still working, there were no RMD’s from his 401k; however, there will be from his IRA. The question is, if the rollover funds the IRA before 12/31/12, when does the first RMD have to be taken, before the end of this year based on the 12/31/11 value of the 401k, or next year based on the 12/31/12 value of the IRA?
Permalink Submitted by Alan Spross on Sat, 2012-12-08 16:58
The latter, end of next year based on 12/31/2012 value.
If he were to retire before the end of this year, 2012 would become an RMD distribution year for the 401k, however his 2012 RMD would have been rolled over to the IRA. He would then have an excess IRA contribution in the amount of the 401k RMD. Same thing would occur if he retires before the end of 2013, that is a 401k plan RMD would be triggered for the 2013 401k year, and that could not be rolled over to the IRA without an excess IRA contribution. But if he did no IRA rollover in 2013, and retired in 2013, his plan RMD could be deferred to 4/1/2014.
This assumes he is not a 5% owner for the firm that sponsors the 401k, since his 401k RMDs would have begun at 70.5 in that case.