401(k) Rollover (RMD)
I have an interesting scenario that I would like guidance
FACTS
401(k) participant rolls over her entire balance to a T-IRA in 2013
Participant turns 70.5 in November 2013
Participant is still employed
No other IRAs
Question:
Did the participant need to take a 401(k) RMD prior to the IRA rollover?
My feeling is no as long as the 401k plan document al;ows a non 5% owner to defer his/her RMD until retirement.
Her first RMD will be from the T-IRA in 2014 (based on the 12/31/2013 account value). Correct?
Thoughts?
Thank you!
Permalink Submitted by Alan - IRA critic on Thu, 2013-04-18 20:45
I agree. There should only be a 401k RMD if participant retires before year end, since retirement would turn 2013 into an RMD distribution year. When the rollover was done neither participant nor employer apparently anticipated retirement so no RMD was distributed. However, if participant DOES retire before year end, what would have been the RMD for the 401k is treated as an excess contribution to the IRA and must be corrected from the IRA. Otherwise, first IRA RMD will be due by 12/31/2014.