Did deceased hit Required Begining Date?
Husband passed away a few year ago and the wife left his 401k with the employer as the beneficiary. The husbands date of birth was 12/20/1939 therefore 2010 is the year he turns 70 1/2 – but he wouldn’t have actually reached 70 1/2 till June. The wife is age 62, if she rolls the 401k into her IRA before June – when the husband would have reach 70 1/2 – does she still have to take his first RMD for 2010 or did she get the funds out in time? I guess the question is is it the “year in which you reach 70 1/2” or do you actually have to reach 70 1/2 to effect the Required Beginning Date?
Permalink Submitted by mk foss on Fri, 2010-03-19 16:49
The required beginning date is April 1 after you reach age 70 1/2. If he was 70 in the last half of 2009, he turns 70 1/2 in 2010 and the required beginning date is April 1, 2011. No RMD is required for him.
Permalink Submitted by [email protected] on Fri, 2010-03-19 16:59
Very help. Much thanks
Permalink Submitted by Alan Spross on Sat, 2010-03-20 00:47
I am coming up with a different conclusion on this one, one you probably will not like as much.
Plan owner passed long before his RBD, and sole spouse beneficiary does not have to take RMDs as a beneficiary until the year her husband would have reached 70.5. That year is 2010, which becomes an RMD distribution year effective 1/1/2010. The actual date he would have reached 70.5 is immaterial.
Since 2010 is a distribution year for the spousal beneficiary, it appears that the amount of her RMD based on her single life expectancy in 2010 is not an eligible rollover distribution (ERD) and the plan should withhold it from any direct IRA rollover. This is based primarily on the following Regs from Sec 402(c):
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Q–7: When is a distribution from a plan a required minimum distribution under section 401(a)(9)?
A–7: (a) General rule. Except as provided in paragraphs (b) and (c) of this Q&A, if a minimum distribution is required for a calendar year, the amounts distributed during that calendar year are treated as required minimum distributions under section 401(a)(9), to the extent that the total required minimum distribution under section 401(a)(9) for the calendar year has not been satisfied. Accordingly, these amounts are not eligible rollover distributions. For example, if an employee is required under section 401(a)(9) to receive a required minimum distribution for a calendar year of $5,000 and the employee receives a total of $7,200 in that year, the first $5,000 distributed will be treated as the required minimum distribution and will not be an eligible rollover distribution and the remaining $2,200 will be an eligible rollover distribution if it otherwise qualifies. If the total section 401(a)(9) required minimum distribution for a calendar year is not distributed in that calendar year (e.g., when the distribution for the calendar year in which the employee reaches age 70 1/2 is made on the following April 1), the amount that was required but not distributed is added to the amount required to be distributed for the next calendar year in determining the portion of any distribution in the next calendar year that is a required minimum distribution.
(b) Distribution before age 70 1/2. Any amount that is paid before January 1 of the year in which the employee attains (or would have attained) age 70 1/2 will not be treated as required under section 401(a)(9) and, thus, is an eligible rollover distribution if it otherwise qualifies.
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While the above Reg refers to the employee, here is another Reg that indicates a surviving spouse is treated as if they were the employee. So just as the employee could not do a rollover without an RMD in the year they turned 70.5, neither can the surviving spouse do that rollover without an RMD:
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Q–12: How does section 402(c) apply to a distributee who is not the employee?
A–12: (a) Spousal distributee. If any distribution attributable to an employee is paid to the employee’s surviving spouse, section 402(c) applies to the distribution in the same manner as if the spouse were the employee. The same rule applies if any distribution attributable to an employee is paid in accordance with a qualified domestic relations order (as defined in section 414(p)) to the employee’s spouse or former spouse who is an alternate payee. Therefore, a distribution to the surviving spouse of an employee (or to a spouse or former spouse who is an alternate payee under a qualified domestic relations order), including a distribution of ancillary death benefits attributable to the employee, is an eligible rollover distribution if it meets the requirements of section 402(c)(2) and (4) and Q&A–3 through Q&A–10 and Q&A–14 of this section. However, a qualified plan (as defined in Q&A–2 of this section) is not treated as an eligible retirement plan with respect to a surviving spouse. Only an individual retirement plan is treated as an eligible retirement plan with respect to an eligible rollover distribution to a surviving spouse.
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