Roll 401(k) into IRA? What about required minimum distributions?

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My Wife has a small 401(k) from a previous employer that we're thinking of rolling into an IRA.

1.) Unless I'm wrong, that's a perfectly allowable thing to do, correct?

2.) What are the requirements for required minimum distributions if I go down this road?

Thank you!

Ed
 
Yes. Perfectly acceptable. Make certain it goes from fiduciary to fiduciary. Don’t get a check cut to her, or taxes are withheld and it becomes a PITA.

RMD are the same from both 401(k) and IRA. Once she’s 70 1/2.
 
Ed, There are a lot of bright people here but I'd suggest some caution. I see you have California in your avatar. I am in a crazy state (NY) as well. I'd suggest a conference with your tax person is best. Hopefully, the suggestions that are sure to come will give you some excellent questions to ask that tax representative.
 
Agreed with the tax adviser advice. Of particular interest, depending on age and income, would be a Roth IRA. The conversion can be done, and you avoid RMD. But this is best discussed with a professional...
 
Thank you all!

O.K., when my Wife starts taking required minimum distributions, what should we do with the money if we don't need it to live on? I mean, sure...we could just take the distributions and let the money collect dust in our bank account but it seems like there would be much better things to do with the money, from a rate of return, reinvestment, etc., perspective, I mean.

:)

Ed
 
Yes. Perfectly acceptable. Make certain it goes from fiduciary to fiduciary. Don’t get a check cut to her, or taxes are withheld and it becomes a PITA.

RMD are the same from both 401(k) and IRA. Once she’s 70 1/2.
I thought the RMD got changed to 72.
 
Thank you all!

O.K., when my Wife starts taking required minimum distributions, what should we do with the money if we don't need it to live on? I mean, sure...we could just take the distributions and let the money collect dust in our bank account but it seems like there would be much better things to do with the money, from a rate of return, reinvestment, etc., perspective, I mean.

:)

Ed
Reinvest, donate, spend, gift.
 
I thought the RMD got changed to 72.
"The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) became law on December 20, 2019. The Secure Act made major changes to the RMD rules. If you reached the age of 70½ in 2019 the prior rule applies, and you must take your first RMD by April 1, 2020. If you reach age 70 ½ in 2020 or later you must take your first RMD by April 1 of the year after you reach 72."

Source: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

Ed
 
Thank you all!

O.K., when my Wife starts taking required minimum distributions, what should we do with the money if we don't need it to live on? I mean, sure...we could just take the distributions and let the money collect dust in our bank account but it seems like there would be much better things to do with the money, from a rate of return, reinvestment, etc., perspective, I mean.

:)

Ed
You can probably pretty much automate it. A family member just had Fidelity automatically send her the required amount every year. You could just as easily have it invested in more shares in a regular taxable account. You could always buy Berkshire Hathaway class B shares as they don't spit out a dividend so you don't have to pay taxes on it each year.
 
Thank you all!

O.K., when my Wife starts taking required minimum distributions, what should we do with the money if we don't need it to live on? I mean, sure...we could just take the distributions and let the money collect dust in our bank account but it seems like there would be much better things to do with the money, from a rate of return, reinvestment, etc., perspective, I mean.

:)

Ed

I'd blow it on travel for sure! If you are thinking of reinvesting I suggest looking into a stable bond fund. I like to use Vanguard for the quality funds and low fees.
 
Thank you all!

O.K., when my Wife starts taking required minimum distributions, what should we do with the money if we don't need it to live on? I mean, sure...we could just take the distributions and let the money collect dust in our bank account but it seems like there would be much better things to do with the money, from a rate of return, reinvestment, etc., perspective, I mean.

:)

Ed
It its a small 401(k) IRA then the RMD is also going to be a small figure. Carefully invest that money in lottery tickets, booze and maybe a tattoo. Blow the rest.
 
It its a small 401(k) IRA then the RMD is also going to be a small figure. Carefully invest that money in lottery tickets, booze and maybe a tattoo. Blow the rest.
I believe the standard joke is to spend it on hookers and blow. And you waste the rest of it.
 
In the past (and maybe current):
One 'retired' could withdraw from a 401k without needing to start the RMD series, with the IRA starting is starting. May affect your emergency funds strategy.
If small (and young) go RIRA, convert as you can to Roth (finish out your marginal rate each year, for example).
 
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