Can a current year’s 401(k) RMD be taken as a QCD from an IRA after a rollover?

Submitted by Ryan Stith on Thu, 2019-12-19 18:50

If a direct rollover from 401k to IRA was processed in a year that an RMD is required but the RMD was not taken from the 401k before the rollover occurred, can the RMD still be taken from the IRA as a QCD?

Due to RMD aggregation restrictions, it’s my understanding that the RMD would have to be processed from the IRA as an excess contribution (…I think). Would this distribution for excess contribution then be eligible for a QCD?



Submitted by Alan - IRA critic on Fri, 2019-12-20 02:25

  • Actually, if the 401k failed to distribute the RMD prior to the rollover, the RMD is still satisfied and must be reported as 401k income. You are correct about the excess regular IRA contribution to the extent of the RMD amount that results. But the corrective IRA distribution is non taxable except for the allocated earnings.  Therefore, the maximum QCD that could be done from the IRA corrective distribution is the small amount of earnings distributed. But unless there was an IRA account on the prior 12/31, there is no RMD due for the IRA in the year of the rollover. 
  • If the corrective distribution from the IRA is done in the following year for which there will be an IRA RMD, the corrective distribution does NOT count toward that RMD since it is mandated to correct an excess. I guess you could still do a QCD from the earnings allocated to the excess, but there is no need to because you will have the allowed portion of the direct rollover (not an excess) subject to RMD and available for QCDs. Accordingly, best to use other IRA funds for the QCD.

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