RMD Question
Hello,
If a client is of RMD age and wants to do a rollover from their 401k, can this be processed it if the client falls under the still working exception? Normally they would have to take their RMD first but if they are still working for the company they technically would not have to take RMDS.
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2025-01-29 14:04
Yes, if still working and not a >5% owner, and if the plan recognizes the “still working” exception, a rollover can be done without an RMD.
That said, if the client did a rollover this year, but was not still employed on 1/1/2026, an RMD would be triggered for 2025, and the rollover would have included the RMD which would be taxable but would also create an excess IRA contribution for the amount of the RMD. That would have to be corrected and would result in filing hassles. Therefore, unless client has definite plans to work into 2026, they probably should wait on the rollover.