RMD Age but Still Working
An individual is at RMD age but all of their retirement money is in a 401(k), they are still working, and they own less than 5% of the company. Their IRA balance at the end of the previous year is $0. They do not have to take the RMD from the 401(k) because they meet the criteria. They also do not have to take an RMD for the IRA because there is no balance at year-end. Can they perform a partial rollover from the 401(k) to the IRA mid-year and subsequently convert the funds to a Roth IRA?
Permalink Submitted by Alan - IRA critic on Wed, 2025-05-21 21:06
Yes, this can be done.
However, the individual should be pretty sure that they will still be employed as of 1/1/2026, otherwise 2025 will become an RMD distribution year for the 401k and the amount of that RMD will become an excess IRA contribution but there will be no balance in the IRA to correct that excess because the IRA would have been converted.
To avoid that mess, the individual should probably make the IRA rollover at least equal to 110% of the amount that would have been the 401k RMD plus the amount to be converted. That would leave enough in the IRA to remove the excess contribution should they not be employed on 1/1/2026.
Permalink Submitted by George McCabe on Wed, 2025-05-21 21:19
Thank you. In the same scenario, could the individual also do a partial rollover to the IRA and then perform a QCD?
Permalink Submitted by Alan - IRA critic on Wed, 2025-05-21 22:02
Yes, but while that QCD would not be taxable, it also would not offset any taxable RMD income. The QCD would be more effective in 2026 when there will be a 2026 RMD due from the IRA.