Advertisement
retirement

A Little-Known Way to Delay RMDs in Retirement

If you roll 401(k) accounts from former employers into your current employer’s plan, you may be able to hold off on required minimum distributions.

I am 74 years old and still working. I’m taking required minimum distributions from an old employer’s 401(k), but I’m still contributing to my current employer’s 401(k). Can I roll the money from my old employer’s 401(k) into my current employer’s plan and delay taking RMDs on the money?

Yes, if your current employer allows you to roll move money from other accounts into its plan. In that case, you can transfer the money from your old 401(k) to your current 401(k) and avoid taking RMDs on that money while you’re still working there.

Advertisement - Article continues below

You must take RMDs from traditional IRAs and former employers’ 401(k)s after you turn 70 ½, but you don’t have to take RMDs from your current employer’s 401(k) while you’re still working in that job no matter how old you are (unless you own 5% or more of the company). “Not all plans accept roll-ins, but most do,” says Tim Driscoll, a director of defined contribution product management for Fidelity.

Have the money transferred directly from one plan to the other to avoid a tax bill or penalty on the rollover. Ask your current employer’s 401(k) administrator about how to move the money.

You won’t be able to avoid this year’s RMD from your old employer’s 401(k), however. “The minimum required distribution for the year must be withdrawn from the former employer’s plan before any amounts would be eligible for the rollover,” says Driscoll. After you take the RMD for the year, though, the rest of the money can go into your current employer’s 401(k).

Advertisement
Advertisement - Article continues below
Advertisement

Most Popular

2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020

Recommended

Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
Searching for the Perfect Place to Retire
Empty Nesters

Searching for the Perfect Place to Retire

We home in on two places with less traffic and lower costs. 
July 2, 2020
Hail to Your Finances, Regardless of Who Wins Presidency
retirement planning

Hail to Your Finances, Regardless of Who Wins Presidency

Don’t try to navigate your investment choices based on election uncertainty. And don’t wait to find out who wins in November to make financial decisio…
June 30, 2020
Resources for alternative forms of transportation needed by many older adults
retirement

Resources for alternative forms of transportation needed by many older adults

For many older adults, having an alternative mode of transportation may be the difference between independence and social isolation.
June 29, 2020