RBD and rollover

[ombskid]

Former owner retired in August 2016. Wants to roll entire account to an IRA. He turns 70 in April. His RBD is 4/1/2017. Does he have to take a RMD in 2017, before he rolls over the balance?

[ESOP Guy]

Yes

[My 2 cents]

While I don't practice in this area, the following is how I understand things to work:\

If the person turns 70 this April, his RBD is technically 4/1/18 (for the 2017 minimum distribution), but if he rolls over his account balance this year, the portion that represents his 2017 minimum distribution cannot be rolled over.  A minimum distribution is required for 2017 if he reaches 70 1/2 in 2017.  Presumably, whether or when he terminates is not material, since he would appear to be a 5% owner (and they don't get to delay minimum distributions until after the year in which they separate, but it really doesn't matter here since his separation was in 2016).  While, absent a rollover, the minimum distribution could have been deferred into early 2018, if there is a full distribution with a maximal rollover in 2017, it must be net of the minimum distribution for 2017.

[ombskid]

Typo - RBD is 4/1/2018

But that doesn't affect th answer - the RMD must come out in 2017 before the rollover

Thanks!