RMD’s from 401k’s
A prospect has a couple of different IRA’s and 3 401k’s.
He turns 70.5 by year end, but is still working and plans to for a few more years.
I would not recommend rolling his IRA’s into his current 401k.
However, if his current employer allows rollovers from other 401k’s, and he rolls the other 2 into it – how would the RMD’s work?
Permalink Submitted by Alan - IRA critic on Wed, 2016-06-01 19:26
Any retirement accounts rolled into a current 401k plan for which the participant is not required to take RMDs due to the “still working” exception also postpones RMDs for the accounts rolled into that 401k. However, since participant will reach 70.5 this year, 2016 RMDs for those other accounts must be distributed prior to rolling into the current 401k plan.
Permalink Submitted by Janis Sleeter on Wed, 2016-06-01 22:08
Am I correct in assuming that if my 70.5 year old client rolls old 401k’s into his current employer’s plan, he has to take his 2016 RMD’s from the old ones first, but would not have to take from the current employer’s plan in 2017 and any other year he is still working there?
Permalink Submitted by Alan - IRA critic on Wed, 2016-06-01 23:13
Correct. His first RMD year for the current plan will be for the year in which he retires. Obviously, he may want to consider both the expenses and investment options of the current plan as well as the low large these RMDs will be if he works well beyond 70.5.