72 year old client rolled over 401K to IRA before taking RMD.
A 72 year old client requested a rollover from his 401K before taking his RMD. He brought the check to my office made out to IRA custodian. What if anything should be done to rectify this situation? Should I move forward with the rollover and possibly request an excess contribution distribution in the amount of the 401K 2017 RMD?
Permalink Submitted by Alan - IRA critic on Thu, 2017-03-16 20:50
The 401k RMD is considered satisfied by the direct rollover check, so the amount of the RMD should be reported on line 16b as taxable. Then the IRA custodian should be requested to treat this amount of the rollover as an excess IRA contribution and removed in the usual manner. If the IRA 1099R is coded correctly, the only taxable amount on the IRA distribution will be any earnings included in the corrective distribution. Client will need to include an explanatory statement with his tax return why he is reporting part of a G coded 1099R from the 401k as taxable.