RMD for Deceased Worker
My client was working beyond his RBD, and therefore was allowed to defer his RMD until he retired, since he was not a 5% owner in the Company he worked for. However, while still employed, he passed away in January of 2012. I believe that there must be a RMD payable in 2012 to his spouse beneficiciary, before she is allowed to complete a rollover of the balance of his 401(k) to her IRA. The Plan administrator is telling me that there is no required distribution until 2013. Who is correct?
Permalink Submitted by Alan Spross on Thu, 2012-07-12 17:23
The administrator is correct.
You are correct that 2012 would become an RMD distribution year if he lived but retired. However, his RBD is defined as 4/1 of the year following the year of separation. Since he passed prior to his RBD, his surviving spouse can do the rollover without an RMD being taken for 2012. Her increased 2012 year end IRA balance will generate a higher IRA RMD in 2013 but only if she is subject to 2013 RMDs.
Death of the participant and spousal rollover is therefore treated differently than retirement of the participant and his own rollover.