to RMD or to not RMD?

[Lori H]

A nhce/non owner participant terminated Feb 2013 at age 74. In March she subsequently rolled over her account to an IRA. Later in the plan year she received a deposit into her former employer's 401k equaling the 2012 employer receivable. She still has a small balance in her 401(k).

Is the plan responsible for issuing her a 2013 RMD or the IRA?

[ESOP Guy]

You have to do an RMD based on the 12/31/2012 balance which may mean there is money in the IRA that shouldn't be in there. The regulations are very clear the March payment should not have happened without the 2013 RMD being done.

The IRA will tell you there is no RMD due from it as there was no balance in it at 12/31/2012. (I am assuming the IRA has not assets except the new rollover).

[Bird]

The plan is responsible for distributing an RMD for 2013. Actually, it did, so the plan's qualification is not at risk - it left the plan, it just went into an IRA when it shouldn't have. If there is enough in the plan now to cover the RMD, then it's easy, you use that to satisfy the RMD. If not, then some of what was rolled over should get a 1099-R with Code 7 indicating it is taxable, then she takes that out of the IRA as it was an excess contribution - very important that she gets the IRA to code it properly so it is not taxed twice.