IRA

Submitted by Larisa Kutac on Thu, 2021-09-16 20:01

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Client is 74 and is working full time.
He is still contributing to his employer’s 401K.
He moved some of his 401K ($500K) to a self-directed IRA via an in-service withdrawal in June 2021.
Before the in-service withdrawal, his 401K had a 12/31/2020 market value of ~$950k.
His self-directed IRA has a 2021 RMD of $31,444 based on a 12/31/2020 balance of $720,089.12 (.04366%).
Since he rolled an additional $500K mid-year into his self-directed IRA from his active 401K, will he need to increase his 2021 RMD amount? If yes, how should this be calculated?



Submitted by Larisa Kutac on Fri, 2021-09-17 13:33

Do you have an answer to the queston above? thanksLarisa 

Submitted by Alan - IRA critic on Fri, 2021-09-17 13:57

The 401k did not distribute the 2021 RMD from the rollover funds because presumably client is not yet subject to 401k RMDs due to the “still working” exception. His IRA RMD for 2021 is based on the 12/31/2020 value and that value is not affected by the rollover. Therefore, the IRA RMD does not need to be recalculated for 2021, but the IRA balance will be higher on 12/31/2021, thereby increasing the 2022 IRA RMD. 

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