401k after RMD age

Submitted by abraham boznick on Mon, 2024-01-22 23:33

A person who is 75 years wants to start working part time in his son’s owned company receiving W-2. The father is currently paying RMD on his personal IRA account. His son has several employees in his company who are part of his company 401k. The father also wants to join this 401k plan after start of employment and then transfer about $500,00 of his IRA money into this 401k. Does the father need to pay RMD on his 401k plan asserts? Please note the last time the father was employed or had any 401k is when he was 68 years old and was working for a large company. Does the father need to fill out any special lengthy form regarding this 500,000 assets in this 401k (as he would have required to do so if the father, for example, opened solo 401k and started working as independent contractor and then transferred $500,000 to his own solo 401k)?



Submitted by Alan - IRA critic on Tue, 2024-01-23 00:00

  • The father can delay 401k RMDs, because even though the family attribution rules would have resulted in treating father as a >5% owner had he been employed in his first RMD year, that determination is only made one time. Therefore, not starting employment there until after that first RMD will allow father to utilize the “still working exception.
  • Of course, the son’s 401k plan must permit acceptance of IRA rollovers for father to shield the IRA assets from future RMDs. And even if he is able to complete the IRA rollover, he will first have to take his 2024 IRA RMD before doing the rollover. IRA RMDs will therefore not be eliminated until 2025, and will also not be avoided in the year that father eventually retires from son’s company. In other words, if father does not work into 2027, 2025 will be the only year that the former IRA balance will be shielded from RMDs under the “still working” exception. 
  • The son’s 401k plan may have some forms to complete, and most likely there would be a certification that the IRA rollover does not include any IRA basis (from ND IRA contributions) since a 401k plan cannot accept IRA basis. If father has any basis in his IRA, he must NOT include that basis in the rollover.

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