IRA Rollover of Deceased Client
A client who is recently deceased received a retirement plan distribution from a former employer 401k plan. The check is made payable to the deceased client and was received in December, 2021 by his spouse. The date of the check is June 2021. Can this distribution check be rolled over to the spouses IRA and avoid taxation.
Permalink Submitted by Alan - IRA critic on Tue, 2021-12-07 17:15
Is the check still good? Was it issued prior to the DOD of client? Was it an RMD? Has the client’s death been reported with a death Certificate to the 401k administrator?
Permalink Submitted by ANTHONY ORLANDO on Tue, 2021-12-07 21:45
The check was issued after the date of death. The check was not an RMD. The client’s death has been reported to 401k admnistrator with a death certificate. The check is made payable to the decedent with a check date of 6/25/21 but just received by the spouse. Spouse has not tried to cash check so we don’t know if it is still good. Can a rollover still be processed.
Permalink Submitted by Alan - IRA critic on Tue, 2021-12-07 22:09
The check should be returned to the plan if it was issued after the DOD, because after the DOD any distributions must be made to the plan beneficiary. If the estate beneficiary was different than the plan beneficiary, that could trigger legal issues. And if the check was not returned, the decedent would receive a 1099R to be reported on decedent’s final return rather than the return of the plan beneficiary. If the check is returned and accepted by the plan, the amount should not appear on the 1099R next month, and will be restored to the plan balance enabling the spousal beneficiary do complete a rollover anytime without 60 day rollover deadlines. The executor for the decedent should call the plan administrator and discuss this. The key is whether the check was issued after the DOD or prior to.