RMD for Employer Sponsored Plan not subject to the SECURE ACT?
FACTS:
Retired school teacher died in 2021 with a balance in TIAA and CREFF.
Her daughter, age 60, was sole beneficiary.
The following data has been communicated to daughter from TIAA:
Value as of 12/28/2021:
TIAA Traditional $25,428.96
CREF $124,457.55
“The IRA you are inheriting will be subjected to the new RMD rules and must be withdrawn by 12/31/2031”
“For the employer-sponsored plan you can spread your RMDs over your life expectancy as this part is subjected to the old RMD rules”.
“The portion of your entitlement attributable to the IRA is $18,738.80.”
“The portion attributable to the employer sponsored plan is $131,147.72”
“For rollover purposes, you will receive a separate check for the portion attributable to the IRA and another check for the portion attributable to the employer sponsored plan”
QUESTION:
Based on the above communication from TIAA, the daughter plans to roll over the $18,738.80 to a Traditional IRA and plans to withdraw by 12/31/2031.
The daughter also plans to roll over the $131,147.72 attributable to the employer sponsored plan to a Traditional IRA and plans to take RMD’s every year over her life expectancy.
Do you concur/agree that the RMD for the portion attributable to the employer sponsored plan ($131,147.72) is NOT subject to the 10 year RMD rules of the SECURE ACT?
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-05 02:37
For the inherited IRA, the plan did not mention the 2021 year of death RMD and that would probably indicate that the participant completed it prior to passing. The entire 18,739 balance can be directly transferred to another inherited IRA that will be subject to the 10 year rule, however the proposed IRS RMD regulations indicate that an annual life expectancy RMD will also be due within the 10 year rule because mother passed after her RBD. This provision is generating controversy and may or may not survive the main proposal, or if it does become law the LE RMD for 2022 might be waived or allowed to be completed in 2023 because the proposal is not expected to be final until late this year. If the proposal sticks, the LE RMD will be based on the attained age of daughter in 2022. Therefore, daughter needs to check into the status of this proposal late this year.
The inherited CREF plan is a govt plan and therefore the Secure Act RMD Regs do not apply to participant deaths prior to 2022, and the familiar life expectancy RMDs will apply without the complications of the proposed Secure Act Regs. Again, there was no mention of the 2021 RMD since it was likely completed. However, a direct rollover to either an inherited TIRA or inherited Roth IRA must be preceded by the 2022 beneficiary RMD distribution as that cannot be included in the direct rollover.