retirement account vs IRA RMD
if a client is still working and has a retirement plan at work;
- he does not have to take an RMD distribution until the year that he retires in.
- However, if he rolls over some of his retirement funds from his 401k or 403b, to his own IRA as is still working, he does have to take the RMD out of his IRA, correct?
- but no RMD out of the balance in his retirement account, correct?
- Example: 500k in 401k and rollsover 400k to his own IRA. He has to take an RMD from the 400k but not from the 100k left in his 401k until he retires.
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Tue, 2025-01-07 18:08
Yes, he would have to take an IRA RMD at the applicable age whether he was still working or not. This also applies to SIMPLE and SEP IRAs.
A qualified plan normally does not require RMDs while still working except for >5% owners of the company. That said, a plan could opt to require them even though IRS rules do not. Therefore, your example would be usually be correct.
Note that some IRA owners who plan to work beyond RMD age will roll the pre tax amount of their IRA into the 401k to delay RMDs for all these funds.