ROlling IRAs into Qualified Plans to Avoid Minimum Required Distributi

[KJohnson]

Given the expanded rollover rules in EGTRRA, can an individual who turned 70 1/2 in 2001, is still employed, and is not a 5% owner roll amounts from his traditional (non-conduit) IRA into his employer plan to avoid any future MRDs (other than the one for 2001) until he actually retires. This assumes that the plan in question will adopt a good faith EGTRRA amendment to accept transfers from non-conduit IRAs.

[Belgarath]

There sure are a lot of clever people out there, and I'm not one of them! I would never have thought of this, but I can't see any reason why it wouldn't work.

The custodian of the current IRA may well require the 2002 minimum distribution to be taken before the proceeds are transferred to the plan. There's been some previous discussion on these boards about whether or not this is required, which I'm not going to rehash, but just be prepared that this is quite likely to happen.

[joel]

Belgareth,

Is the receiving plan a DC or DB plan? Will the employee have the right to rollover the funds upon his subsequent retirement? Or does he want to be relieved of the RMD for this IRA by subsequently annuitizing the rolled over funds upon retirement?

Peace,

Joel L. Frank

[Belgarath]

Beats me! I was assuming it is a DC plan, and that subsequent rollovers are allowed. But your point is well taken.

I was discussing this issue earlier today with an attorney, who commented, and I can't quote him exactly, something like,"The remaining discontinuities in the rollover rules will offer unparalleled opportunities to trap the unwary."

[mbozek]

Under the amendments to IRC 408(d)((3)(D)(A)(ii) there can be direct rollovers from an IRA to a qualified plan, 403(B) annuity or 457 plan except for any after tax amounts in the IRA. Since Congress clearly excluded only after tax amounts in an IRA there is a definite intent to permit all other transfers between IRAs and employer sponsored plans without restriction.