Beneficiary RMD still employed 401k/403b

Submitted by Ryan Smith on Wed, 2022-08-24 12:32

We have a situation for a client. The facts.
Brother was 76 when passed away.
Passed away November 2021.
She is 72 this year, so can be an EDB.
Brother was taking RMDs from 401A upon death and satisfied his 2021 RMD before his death.
Brother was active 401k and 403b participant upon his death so was not taking RMDs from those plans.

She would take an RMD for the 401A in 2022 for sure, also the 401k and the 403b in 2022.

1. The main question is would she have to take an RMD for 2021 (his RMD) as he was an active participant in the 401k and 403b plan at the time of his death and not taking RMDs? Not sure the rules if you are not taking RMDs, over age 72 and die.

2. Follow up question. What life table does she use as and EDB? Single, Uniform, something else?

Thank you for your help!



Submitted by David Mertz on Wed, 2022-08-24 13:26

  • Because Brother died in 2021 before his required beginning date for RMDs from the 401(k) and 403(b) (which would have been April 1, 2022 had he retired in 2021), there are no 2021 RMDs to be taken from these accounts.
  • Sister must use the Single Life Expectancy table.  Because she will reach age 72 in 2022, her life expectancy factor for 2022 is 17.2, reduced by 1 each subsequent year.

Submitted by Ryan Smith on Wed, 2022-08-24 19:07

TIAA Cref took an RMD of his for 2021 when they transferred the funds to the beneficiary, thus doing it wrong!

Submitted by Ryan Smith on Wed, 2022-08-24 19:15

If the custodian cannot fix the mistakenly taken RMD can we utilize the 60 rollover rule to add it back into the Beneficiary IRA? 

Submitted by Alan - IRA critic on Thu, 2022-08-25 00:39

  • No, a non spouse beneficiary can never to a 60 day rollover of a distribution, even when the distribution was in error. TIIA Cref apparently confused the RMD rules with those of a retiree rather than those of a decedent passing prior to RBD. The only possible solution was to return the uncashed check to TIIA within a short time after receipt with a request to re deposit it back to the account. Likely not possible now.
  • Note that to simplify these accounts, she should probably do direct rollovers to an inherited IRA. The 2022 beneficiary RMDs would have to be distributed before rolling the balance to an inherited IRA. If brother was a participant and not a beneficiary of these plans, she could combine all of them into a single inherited IRA.

Submitted by Ryan Smith on Thu, 2022-08-25 11:09

Thank you!

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