RMD
Wife inherited a Thrift savings plan from the death of the husband, who passed away in 2007 and was 69 (01-08-1938). She signed the forms for a rollover this year in 2008.
Thrift savings sent her an RMD based on her husband, because they said her husband would have been 70 1/2 in 2008, so they have to send her the RMD. Then they rolled over the rest.
She is only 69 this year.
Was this right for them to do this to her? she didn’t need the money. Can she send the check back to them and ask to rollover? or can she cash the check and send in within 60 the full amount to the new investment to avoid a tax liability?
any thoughts?
Thanks,
Douglas
Permalink Submitted by Alan Spross on Tue, 2008-02-12 22:45
Douglas,
No, the RMD should NOT have been withheld from the rollover because her husband passed prior to his RBD of 4/1/09. But no harm done, since she can just roll over the distribution herself within the 60 day period.
Ref: IRS Reg 1.401a(9)-(3), Q3:
(b) Spousal beneficiary. In order to satisfy the rule in section 401(a)(9)(B)(iii) and (iv), if the sole designated beneficiary is the employee’s surviving spouse, distributions must commence on or before the later of—
(1) The end of the calendar year immediately following the calendar year in which the employee died; and
(2) The end of the calendar year in which the employee would have attained age 70 1/2.
Permalink Submitted by [email protected] on Wed, 2008-02-13 00:17
the problem is that Thrift Savings took out taxes from the RMD.
Should I get the check from the client and forward to Thrift with a letter to rollover the amount of the check and the taxes taken out?
What rule would I site for their mistake?
Thank you,
Douglas