RMD of 401k due to death
individual died 3/9/2021, he was 79, still working and contributing to his 401k. Wife is sole beneficiary (her DOB 11/10/47), will she need to take RMD for 2021 based on his age since he did not stay employed thru 2021?
I think Alan meant to say, “Wife can do a direct rollover to her own IRA and will *not* have an RMD on these funds until 2022.”
Yes, good catch. I updated that post.
The retirement notice would not change things if the company determined that he no longer met the “still working” definition as of the DOD. There is no reason to think that the company would treat him as still working with the DOD 5 days past the indicated retirement date. However, since his RBD would then be 4/1/2022 and he passed prior to his RBD, wife could still do a direct rollover without taking a 2021 RMD.
Death is treated differently than if he had simply retired. Had he retired and lived, a direct rollover to his IRA would require that the 2021 RMD be distributed and not included in the rollover. But because he passed prior to his RBD, the wife is not subject to taking the 2021 plan RMD and can roll over the entire balance.
Permalink Submitted by Alan - IRA critic on Thu, 2021-03-18 15:13
Because individual was still working, there is no 2021 RMD due from his current plan since he passed prior to his RBD. Wife can do a direct rollover to her own IRA and will not have an RMD on these funds until 2022. She should determine if there is any highly appreciated employer shares in the 401k with a low enough cost basis for NUA, and also if any after tax non Roth contributions that can be directly rolled to a Roth IRA. Finally, since 2021 is the last year she can file jointly, she might want to consider a Roth conversion in 2021.
Permalink Submitted by Don Warnke on Thu, 2021-03-18 15:32
he had notified his employer that he planed to retire and gave them a retirement date, he got sick 5 days before retirement date and died a week or so after the planned retirement date while in the hospital. Would that change anything?