Forced to stay in 401k?
Can a 70.5 year-old retired employee be required to take their RMD before they can take a partial rollover from their 401k? In other words, can they be forced to stay in the 401k until they take the RMD? (She is still working elsewhere and does not want the RMD until next year.)
Permalink Submitted by William Tuttle on Wed, 2017-03-29 18:20
From your description it sounds like the 401k only allows full distribution prior to the commencement of RMDs. That is entirely at the discretion of the 401k
Permalink Submitted by David Mertz on Wed, 2017-03-29 19:38
Since any movement of funds from the old employer’s 401(k) involves a distribution from the 401(k), and since this person has reached age 70½ making any distribution from this 401(k) an RMD until the entire RMD for the year has been satisfied, the RMD distribution must be made before, or simultaneously with, any other amounts that are moved from the 401(k) (and, of course, the amount this is RMD cannot be rolled over). So if 2017 is this person’s first RMD year and this person wants to delay any taxable distributions until early 2018, all of the funds must remain in the this 401(k) until 2018.