IRA Rollover into qualified plan after making contributions
70-year old retired and rolled all of his funds out of his 401k and into an IRA. There’s no basis in the IRA. In 2025 he made a $7,000 timely deductible contribution to that same IRA for tax year 2024. At 72 years old, retiree has now gone back to work for the same company that provided the original 401k. Assuming the 401k provider accepts rollover contributions (which they do), can he roll funds back into his 401k for the purposes of delaying/avoiding RMDs in 2026 and beyond, so long as he is working for that company? If so, does the $7k need to stay behind in the IRA, or be removed with growth, and amend 2024 tax return? Or can the entire balance, including the contribution be rolled back into the 401k?
Permalink Submitted by Alan - IRA critic on Tue, 2025-05-27 18:41
The entire IRA balance can be rolled to the 401k providing that the 401k does not restrict such rollovers to “rollover IRA” accounts. His IRA is no longer a “rollover IRA” because it received a regular contribution. If the 401k will not accept the full rollover from the IRA, he might ask them if he removes the 2024 contribution net of gain/loss will the 401k then view the IRA as a “rollover IRA” again.
Of course, he will not be able to avoid 401k RMDs if he is a >5% owner of the company anytime during 2026. The plan must consider family attribution rules in determining the >5% ownership.
The reverse rollover will not reduce his RMDs until he is still working there on 1/1/2027 because if he retires any time in 2026, then 2026 will become a 401k RMD distribution year.