Does a 401k withdrawal satisfy the RMD?
I have a 73 year old client that has just retired. He has been a participant in a 401k until his retirement last week. Two months ago he withdrew money from his 401k that is equal to about double his 2015 RMD requirement. We are moving his money to an IRA to provide retirement income. Does he now have to satisfy his 2015 RMD with his new IRA?
Thanks in Advance! Bobby
Permalink Submitted by Alan - IRA critic on Wed, 2015-08-12 19:39
Since he has now retired before the end of 2015, the distributions taken recently are deemed to apply toward his 2015 RMD. Only the excess of his RMD is eligible for rollover to the IRA. If all the distributions have been rolled over to an IRA, the RMD has still been satisfied, but rolling the RMD amount to an IRA must be treated as an excess IRA contribution and removed in the usual fashion. Since the RMD has been satisfied, client could also roll the remaining 401k balance to the IRA.
Permalink Submitted by Robert Gentry on Wed, 2015-08-12 19:49
Very much!