RMD after rollover

[TPA2015]

A participant, who is 72 years old, works for a company (Company A), which is owned by an unrelated third party, and also works for a company (Company B) that she owns with her husband.  In 2017, she took an in-service distribution from Company A's 401(k) and rolled it to the Company B's 401(k), which was established in 2017.  Company B has also sponsored a DB plan for several years and she has been taking RMDs from the DB since she was 70-1/2.

Since she did not have an account balance in Company B's 401(k) at 12/31/16, would 12/31/18 be her first required minimum distribution date from the 401(k)?

§1.401(a)(9)-7 Rollovers and transfers.

Q-1. If an amount is distributed by one plan (distributing plan) and is rolled over to another plan, is the required minimum distribution under the distributing plan affected by the rollover?

A-1. No, if an amount is distributed by one plan and is rolled over to another plan, the amount distributed is still treated as a distribution by the distributing plan for purposes of section 401(a)(9), notwithstanding the rollover. See A-1 of §1.402(c)-2 for the definition of a rollover and A-7 of §1.402(c)-2 for rules for determining the portion of any distribution that is not eligible for rollover because it is a required minimum distribution.

Q-2. If an amount is distributed by one plan (distributing plan) and is rolled over to another plan (receiving plan), how are the benefit and the required minimum distribution under the receiving plan affected?

A-2. If an amount is distributed by one plan (distributing plan) and is rolled over to another plan (receiving plan), the benefit of the employee under the receiving plan is increased by the amount rolled over for purposes of determining the required minimum distribution for the calendar year immediately following the calendar year in which the amount rolled over is distributed. If the amount rolled over is received after the last valuation date in the calendar year under the receiving plan, the benefit of the employee as of such valuation date, adjusted in accordance with A-3 of §1.401(a)(9)-5, will be increased by the rollover amount valued as of the date of receipt. In addition, if the amount rolled over is received in a different calendar year from the calendar year in which it is distributed, the amount rolled over is deemed to have been received by the receiving plan in the calendar year in which it was distributed.

 

[ESOP Guy]

13 minutes ago, TPA2015 said:

A participant, who is 72 years old, works for a company (Company A), which is owned by an unrelated third party, and also works for a company (Company B) that she owns with her husband.  In 2017, she took an in-service distribution from Company A's 401(k) and rolled it to the Company B's 401(k), which was established in 2017.  Company B has also sponsored a DB plan for several years and she has been taking RMDs from the DB since she was 70-1/2.

Since she did not have an account balance in Company B's 401(k) at 12/31/16, would 12/31/18 be her first required minimum distribution date from the 401(k)?

 

I would agree with the conclusion I made bold. 

[david rigby]

Did the 2017 distribution include a RMD?  If so, that portion was ineligible for a rollover.

[CuseFan]

yes, on 12/31/2018.

the 2017 in-service should not include any RMD since still working