Are RMD's required for rollover money into new plan

[Alan Simpson]

Situation: Employee has money in a retirement plan with previous employer and wants to roll it into plan with new employer. Employee is due required minimum distributions from prior plan due to the attainment of age 70 ½. However, when the money is rolled into the new plan will the employee still have to take RMD's applicable to the rollover money even if the new plan allows for the postponement of the RMD's until termination of employment. (Note, until the money is transfered the RMD's will be taken)

Any cites would be appreciated.

[Dave Baker]

Interesting! I bet no RMDs are required once the money is rolled over. Even though the employee's account in the new employer's plan consists partly of rolled-over money, I don't see anything in 401(a)(9)© (defining required beginning date) that would make a distinction ... if I'm still working and I'm not a 5%-owner, then I haven't reached my required beginning date with respect to the funds in that plan.

Great post!

[This message has been edited by Dave Baker (edited 06-26-99).]

[Guest FredReilly]

I can't think of an instance in which a rollover retains any characteristic (other than tax basis) that it had as a benefit in the distributing plan. It is always subject to the distribution rules of the receiving plan. Under the current 401(a)(9) rules if it had not been distributed and the plan was amended to eliminate RMD's for nonowners, there would be now question that now further RMD's required. I don't see how your situation differs from that scenario either.

[Guest FredReilly]

I can't think of an instance in which a rollover retains any characteristic (other than tax basis) that it had as a benefit in the distributing plan. It is always subject to the distribution rules of the receiving plan. Under the current 401(a)(9) rules if it had not been distributed and the plan was amended to eliminate RMD's for nonowners, there would be now question that now further RMD's required. I don't see how your situation differs from that scenario either.