401k Beneficiary account in RMD
Husband passed away leaving a 1 million plus 401k to spouse in 2024, plan registration has since been updated to wife. She has no Trad IRA only this 401k which is 100% pre-tax money. The 401k RMD divisor for 2025 is 11.2 for her which is so far off considering her DOB is 7/16/45 and husband was only 1 year older. Plan will not listen to correct and response is to talk with her tax advisor but will not correct according to plan after multiple attempts.
My plan is to rollover the 401k in 2025 to a Trad IRA and in 2026 my assumption is her divisor will be dramatically lower (ie: 19.4 in 2026 with DOB of 7/16/45). Unfortunately, I realize she must take the 401k RMD in 2025 thou likely the wrong figure but by rolling to her own IRA this year she can then use a correct divisor on her life in 2026 via the IRA.
Just wanting to ensure I’m not missing anything that will force her to continue the RMD factor from the 401k plan to her IRA IN 2026, I’m confident I’m not but looking for input?
Even if the 401k plan required her to continue the spouses factor it would be much higher than 11.2. Part of me wants to roll back some of the RMD from 401k upon receipt for 2025 and have her tax advisor draft a response or whatever mechanism is used to explain why some of the RMD is being rolled back over with her 2025 return. I assume proving the DOD and both DOB’s would be evidence the plan was incorrect in their calculation. Its a substantial diff from their calc versus what it should be.
Permalink Submitted by Alan - IRA critic on Fri, 2025-08-01 18:51
Several issues here.
Did husband complete his 2024 RMD before passing? If not, the plan must distribute it to the spousal beneficiary no later than the end of this year.
For 2025, the spouse is allowed to notify the plan that she has elected to be treated as the participant, and her 2025 beneficiary RMD will then come from the Uniform Table (Divisor 20.2) for her age in 2025. This provision is Sec 327 of Secure 2.0. She must notify the plan of this election ASAP before the plan distributes a single life table RMD for 2025. The 2025 beneficiary RMD must be distributed before the account can be directly rolled over to the spouse’s own IRA.
Since these Regs are not yet final, and if the plan administrator does not understand this election or rebuffs it and then issues a single life table RMD for 2025, I see no reason that the spouse could not rollover the excess to her IRA.
Of course, if the spouse needs the amount that would be distributed by the 11.2 single life divisor, there is no sense in even making the election to the plan because it will not reduce the amount she needs from the plan in 2025.
Permalink Submitted by MIKE KRUCHTEN on Wed, 2025-08-06 08:00
Hopefully the 401k plan adjusts the factor for 2025 RMD but by moving to an IRA as her own it would allow a reset of RMD factor for 2026 RMD calculation. Just wanting to ensure regs/rules allow client to use Table 3 in 2026 within her IRA (OPENED VIA 401K ROLLOVER) and isn’t forced to continue using Single Life Table.
Permalink Submitted by Alan - IRA critic on Wed, 2025-08-06 10:04
The IRA RMD for 2026 and all years thereafter will be from the Uniform Table, as she will own the IRA. So even if the 401k plan does not recognize her option to be treated as the participant for RMD purposes and distributes a single life table beneficiary RMD for 2025, that has no bearing on her owned 2026 IRA RMD.
But if she wants the 401k 2025 RMD to be calculated with the Uniform Table, she will have to clearly tell them that she is electing to be treated as the participant. That entitles her to the Uniform Table calculation from the plan for 2025.
Permalink Submitted by MIKE KRUCHTEN on Mon, 2025-08-18 14:09
Client spoke with the 401k admin requesting they treat her as deceased employee per Section 327 for 2025 RMD calculation. In reading further, if the plan allows the update for 2025 RMD it seems they would use her spouses DOB not hers but use Uniform Table versus Single Life Table. Section 327 doesn’t seem to speak to using surviving spouse’s DOB, unless I’m missing a fact? If the plan refuses to update the calculation for 2025 RMD distribution then client is wishing to rollback the excess to her IRA via 60 day rollover but would need to use correct factor on calculating what she deems the correct RMD factor for 2025. I realize once rolled to her IRA her 2026 RMD factor is her own DOB using Uniform Table but is 2025 RMD to use her deceased husband’s DOB then use Uniform Table factor dividing by 12/31/24 FMV of 401k plan??
Section 327, Surviving spouse election to be treated as employee. Section 327 allows a surviving spouse to elect to be treated as the deceased employee for purposes of the required minimum distribution rules. Section 327 is effective for calendar years beginning after December 31, 2023.