Distribution Requirements for 457 b Government Plan Beneficiaries?
I understand the Secure Act rules do not apply to 457 b government plan beneficiaries until 2022.
If there are multiple beneficiaries and no spousal beneficiary, what are the RMD requirements? Which life expectancy determines the RMD amount ?
Permalink Submitted by Cathy Lacefield on Wed, 2021-02-10 03:52
I should have stated our loved one passed away after the required beginning date, and was 82 years old.
Permalink Submitted by Alan - IRA critic on Wed, 2021-02-10 03:57
The beneficiaries should do direct rollovers their own inherited IRA accounts. Most likely, all or most of them would be subject to the 10 year rule, although any eligible designated beneficiary (EDB) is entitled to life expectancy RMDs. Since Secure offers sparse info on multi beneficiary situations, any EDB should be sure to complete the direct rollover no later than 12/31 of the year following death in order separate themselves from the 10 year rule beneficiaries. It’s not clear how they are affected if they do not.
Permalink Submitted by Cathy Lacefield on Wed, 2021-02-10 04:04
Thank you! So do I understand correctly the Secure Act does apply, including the 10 year rule, in this case even though the account owner died in 2021?
Permalink Submitted by Cathy Lacefield on Wed, 2021-02-10 04:15
There are no EDBs in this case. Since Secure Act does not apply to 457 plans until 2022, I wonder if the beneficiaries could avoid the 10 year rule taking effect in 2022, by directly rolling over to inherited IRAs in 2021.
Permalink Submitted by Alan - IRA critic on Wed, 2021-02-10 13:53
My prior response crossed in the mail with yours stating that the participant has already passed, and I assumed participant would pass after this year. Since participant passed prior to the year the Secure Act takes effect for govt plans, the beneficiaries will be eligible for the stretch without being EDBs. The Secure Act does not apply here.
Beneficiaries should still do the direct rollover to separate inherited IRAs where life expectancy RMDs will begin in 2022 using their individual single life expectancies (Table 1). New tables are to be introduced in 2022 somewhat reducing RMDs. They should name their own beneficiaries to which the Secure Act will apply upon the death of the current beneficiaries. The successor beneficiaries will have 10 years.