RMD Question
Hello –
Client’s DOB is 09/15/1950, so turns 72 this Sept. Initial RMD is required to be taken by April 1, 2023 (may be taken this year to avoid doubling up next year).
Client has a Traditional IRA (which we manage) as well as an OLD/Former 401k Plan w/ a prior employer for which the EE left employment in April, 2019. This OLD 401k Plan is going to be rolled over into the Traditional IRA we manage.
Question: In the event of a roll-over such as the above, I know the first distribution must be the RMD when one hits RMD age. Since the initial RMD isn’t technically due until April 1st of next year, may we have the entire OLD 401k Plan rolled into the Traditional IRA? Or, must the 1st year’s RMD first be taken (say soon/in 2022), AND ONLY THEN may we roll over the balance into the Traditional IRA?
Appreciate your assistance!
Jason
Permalink Submitted by Alan - IRA critic on Mon, 2022-05-02 15:03
The latter. Since this is the first RMD distribution year for the 401k despite the RBD being in 2023, and a direct rollover is technically a distribution and rollover, the plan must distribute the 2022 RMD before doing the direct rollover of the remainder. Therefore, there will be one 1099R showing Code 7 for the RMD, and another with code G for the balance rolled to the IRA.