401(k) Plans & IRA Custodians: Today’s Slott Report Mailbag

Thursday, July 29, 2021

By Sarah Brenner, JD
Director of Retirement Educations
Follow Us on Twitter: @theslottreport

Question:

If you are an employee who participates in a 401(k) who retires at age 73, do you have to take an RMD in the year you retire, or can you take your RMD by April 1 of the year following retirement? If you can take your RMD by April 1 of the following year, does that mean you have to take two RMDs in that year?

Answer:

If you are using the still-working exception to delay RMDs from your plan, you must take an RMD for the year you retire. You can delay that first RMD until April 1 of the year following the year you retire. However, if you do delay your first RMD until the next year, you would need to take two RMDs in that year. The first would need to be taken by April 1, and the second would need to be taken by December 31.

Question:

Hello,

Could you answer this question? Can I establish a new inherited IRA at one custodian and, if I am not satisfied with that institution, can I then transfer that inherited IRA to a different institution? Thank you for your guidance.

Sincerely,

Judy

Answer:

Hi Judy,

It is possible to move inherited IRA assets from one IRA custodian to another, but it must be done correctly. You can only do a direct trustee-to-trustee transfer from one inherited IRA to a new inherited IRA. Be careful here. The funds must move directly. A nonspouse beneficiary cannot do a 60-day rollover. If the funds are distributed to you, you will not be able to put them back in an inherited IRA, and this is a mistake that cannot be fixed.

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