Active Particpant in 401k wants to Roll over his IRA into plan to avoid RMD

[PainPA]

I never came across something like this...

A participant turned 70 1/2 in 2010. He is actively participating in the company 401k.

He has an outside IRA that he would like to roll into the 401k plan to avoid the RMD.

The plan doc allows for the RMD to be at retirement date instead of 70 1/2.

Is there anything I would need to be concerned with him bringing in the IRA to the plan?

The only think I see for him to do is to take the RMD for 2010 before rolling it over to the plan.

Any thoughts or concerns?

[BG5150]

Does the plan allow for rollovers in of regular IRAs? As a default, we do not write plans that allow this.

[QDROphile]

Plans often do not take rollovers from outside IRAs becuase they are a pain. Does the IRA have after tax amounts? Has the IRA crashed becuase of noncompliance? Does the plan want to bother? A typical exception is a conduit IRA that has a clean history and records to prove it.

[Bird]

Recognizing the potential pitfalls noted - yes, it can be done. If he does it now, he'll still have to take the RMD from the IRA before the rollover, but then for future years it is subject to the plan rules (no RMDs until terminated).

[PainPA]

good points...

The plan does allow for IRA's as most of my advisors bascially say they will not pass on any money coming into the plan even though it is a plan sponsor request.

How would someone know if the IRA has noncompliance? better yet how does a TPA protect against this? there is a form from teh vendor that has the trustee sign off that all is on good order.

I guess the answers are what you mentioned previously is that make it simple and not allow any at all... or just conduit....