RMD 401K
A client is rolling over his 401k to his individual IRA and is RMD age. Should the client take his RMD with the 401k company before rolling over the funds to individual IRA? If the client already rolled over his 401k funds is he allowed to go ahead and take RMD out of the individual IRA?
Permalink Submitted by Alan - IRA critic on Mon, 2022-08-29 16:06
If this is an RMD distribution year for the 401k, the RMD cannot be included in the rollover. If it was, it must be reported as a taxable distribution up to the RMD amount, then that amount must be removed from the rollover IRA as an excess contribution. Sometimes, an active employee can do a rollover, but then retires before year end and creates an RMD distribution year for the 401k with a retroactive error if the RMD was rolled over. But if the employee retired before the rollover, then the plan administrator should have distributed the RMD before doing the rollover.