401(k) in-service withdrawal and QCD

Submitted by Chase Hill on Fri, 2018-11-09 23:04

Client is 70 1/2 but still working so no requirement to take RMD. The plan allows for in-service withdrawals. Would the client be able to take a rollover distribution to a new IRA and then process a QCD to charity? I know a QCD is not allowed from the 401(k) directly. I would be concerned the client would be forced to take their RMD first, even though they would normally not have to take the RMD since they are still working.



Submitted by Alan - IRA critic on Sat, 2018-11-10 00:14

  • Yes, client can do a direct rollover of intended QCD amount to a new or existing IRA account. Assuming client has actually passed 70.5 (to the day), client can then do a QCD from the IRA account. However, if client has already taken any IRA distribution anytime this year, the QCD will not offset the taxable income from the earlier IRA distributions which would be deemed to apply to his IRA RMD. Therefore, to get the maximum benefit from the QCD, the client should not have taken a prior IRA distribution. 
  • As for the 401k partial rollover, it does not affect his 401k RMD unless he retires before 2019. Am assuming client is NOT a greater than 5% owner of his employer.

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