Indiv 401k to IRA; RMD timing

Submitted by Mobey on Wed, 2018-12-19 19:03

Have a client with two indiv 401k’s. He’d like to be able to roll them to an IRA and send the RMD to charity.

Would that have to be done before year end 2018 if we want to do the RMD to charity in 2019 or can it all be done in 2019?

thanks



Submitted by Alan - IRA critic on Wed, 2018-12-19 20:57

  • The 401k RMD must be distributed before an IRA rollover. Therefore, the the first year that an IRA QCD could be used to offset taxes on an IRA is the year after the year the IRA rollover is completed. Therefore, in order to do IRA QCD for 2019, the 401ks must be rolled over this year and there will be a year end 2018 IRA balance that generates a 2019 IRA RMD. However, the 2018 401k RMD must be distributed prior to doing the IRA rollover.
  • Likewise, if the IRA rollover is not completed in 2018, the 401k must distribute the 2018 RMD, then it will also have to distribute the 2019 RMD before doing an IRA rollover in 2019. In this case, the first QCD could not be done before 2020. I am referring here only to the funds that are now in these 401k accounts.

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