HH fully owned an S-Corp for many years.
The company had a Profit-Sharing Plan that contained only Employer contributions. No ER contributions have been made in years.
There was one brokerage account for the PSP and the Third Party Administrator provided annual account balances to each participant, using the balance as of Sept 30th (corporate fiscal year end).

HH – DOB: 8/6/1942 age 70.5 = 2/6/2013 Even though still working in 2013, HH took his first RMD in FEB 2013 (100% owner)

HH’s wife – DOB: 8/15/1943 age 70.5 = 2/15/2014 The wife has a small balance in the PSP and is the major beneficiary of HH’s PSP account

HH gifted all of the S-Corp non-voting shares (99% of the shares) to his two adult children in August 2013 (49.5% to each child) and retained 1% (all of the voting shares)

HH dies 10/10/2014

The remaining 1% of the S-Corp moves from HH’s trust to his daughter’s Family Trust at HH’s death. Daughter/Daughter’s trust now owns 50.5% of the shares. She is now President of the S-Corp.

Daughter initiates paperwork to terminate and distribute the PSP. Checks were delivered Thursday (3/13/14) to the participants.

Daughter deposited her PSP check into her IRA.

HH’s wife deposits her PSP check into her IRA, and also deposits her beneficiary check into the same account. Wife worked for the company as an employee up until Nov 2013. At that point, her salary was discontinued. HH’s wife has continued to be paid as an officer since NOV 2013.

Questions:

1) Should an RMD be distributed for YR 2014 based on the PSP balance for the deceased HH (the funds were still in the PSP 12/31/13)?
If yes:
• Can we take it from the HH’s wife’s IRA?
• Should it be based on the 12/31/13 PSP balance (which included two charities as partial beneficiaries)?

2) Should an RMD be distributed for YR 2014 for HH’s wife’s PSP balance?

Thanks in advance,

Chris