401k RMD
Client is age 78, was still working at the beginning of the year, had a 401k with that employer. Client terminated employment in February, rolled the 401k to an IRA in March. Is an RMD required from the IRA?
Client is age 78, was still working at the beginning of the year, had a 401k with that employer. Client terminated employment in February, rolled the 401k to an IRA in March. Is an RMD required from the IRA?
Permalink Submitted by Alan - IRA critic on Fri, 2014-10-31 19:18
The 2014 401k RMD should NOT have been included in the March rollover. If the rollover was done on the entire balance, the RMD for the plan is still considered completed, however it is not eligible for rollover and becomes an excess contribution to the IRA. Client must request the distribution with allocated earnings of the excess IRA contribution. This will not be costly, but is awkward to report because the RMD amount must be shown on line 16b (taxable). Any earnings on the corrective IRA distribution goes on 15b. The corrective distribution from the IRA does NOT apply to the IRA RMD for 2014 if the IRA had a balance on 12/31/2013.