Q & A
What are the strategies for consolidating deferred comp. plans at the point of RMD?
Full question: I’m 70 and still working. I’ll be 70 1/2 this year and have IRAs and old 401k at previous employers. Is it too late to roll these retirement accounts to my current 401k to avoid RMD for this year? If too late for this year, what about future years? Basically is the 70 1/2 RMD rule based on assets in the account as of 12/31 of the prior year or what is in there as of 70 1/2?
Answer: Yes, you are too late to avoid this first RMD but you can delay taking it until April 1, 2015. The Required Minimum Distribution (RMD) is based on the 12/31 balance of the calendar year before the calendar year in which you turn 70 ½ — in this case 12/31/2013. Rolling into the existing 401(k) will help in future years but your current plan must accept rollovers, you cannot own more than 5% of the company sponsoring the 401(k), and you have to keep working.
Source: Dan Moisand – MarketWatch.com, April 11, 2014
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