401 k t0 IRA
I have a client age 75 still working that would like to move part of his 401k plan to an IRA. He is planning to retire this year. the problem is, the move of a potion of his 401k has to be completed before his retirement date. He can request a distribution for hardship because of repairs to his home, but can we make it paid to his intended acct with said Insurance Co and does it count as a rollover because it is made out to XYZ insurance co company.
Permalink Submitted by Alan - IRA critic on Wed, 2016-01-27 16:58
If he retires this year, the first distribution made this year is applied to his RMD retroactively and is not eligible for rollover. If rolled over, an excess IRA contribution is created. A hardship distribution is also not eligible for rollover, but would satisfy the RMD. However, at his age he should be eligible for in service non hardship distributions under most plans. The best scenario would be to receive a non hardship distribution large enough to satisfy his RMD AND his repair bills. If he has some money left over he can roll it to an IRA as long as the RMD has been satisfied and less than 60 days has passed. Again, no portion of a hardship distribution is eligible for rollover. I assume the insurance company account is a rollover IRA.