IRA to 401K rollover
I have a client that is over 70.5 and is working full-time (less than 5% owner). He has an IRA that he plans to roll into his employer-provided 401(k).
If he rolls the IRA to the 401(k) in January 2018, will there be a 2018 RMD (assuming there is a balance in the IRA on 12/31/17)? What if the rollover processes before year-end and the 12/31/17 IRA balance is $0?
My understanding is he cannot roll his 2017 RMD into the 401(k), correct?
Thanks in advance.
Permalink Submitted by Alan - IRA critic on Wed, 2017-12-27 18:24
Correct. If he rolls the IRA into the 401k this year (probably too late). he will have to complete the 2017 IRA RMD first in order to avoid rolling an RMD into the 401k which will cause a serious problem. If rolls the IRA over in 2018 he will have to complete the 2018 IRA RMD first. In other words, rolling an IRA into a 401k while still working will eliminate the IRA RMD for future years, but NOT for the year the rollover is processed.