401k and IRA rollover into new individual- 401k
i have a client who has changed employers and creating his own one-person ( individual ) 401k plan. His intent is to directly transfer the former 401k into the new individual 401k, and directly rollover IRA assets into the individual 401k. since he is RMD age, the intent is to avoid RMDs in 2024 on the previous 401k and although he will have to take RMDs from the IRA in 2024, he should be able to avoid 2025 RMDs from the IRA.
the value of the individual 401k will be greater than $1M. is there a IRS form that must be completed due to the value of the new 401k? and is there any other issues to consider, other than at termination of income from new position, RMDs must begin from new 401k.
thank you
Permalink Submitted by Alan - IRA critic on Sun, 2024-04-14 23:56
The current 401k must distribute a 2024 RMD since client has separated from service, and there will also be a 2024 IRA RMD due. Further, for any solo K the business owner is obviously a >5% owner which will result in solo K RMDs in 2025 based on the total 12/31/2024 value.
If the plan value exceeds 250k at the end of the year a Form 5500 EZ or 5500 SF must be filed that includes info about the employer and where the contributions came from. A solo K is not effective in delaying any RMDs due to the >5% ownership rules.