Year of death RMD on lump sum / survivor pension to IRA?
This is a bit of a follow up to an earlier question…
A pensioner dies (post RBD age), and leaves behind a lump sum pension benefit of $3,000 (standard in the NY retirement system) as well as an owed pension payment. NYS is giving the spouse beneficiary the option to roll the owed pension payment (about $3500) plus the $3000 survivor lump sum pension benefit into her IRA. Is that permissible or must she attempt to take an RMD first?
Permalink Submitted by Alan - IRA critic on Thu, 2023-04-06 00:54
The plan is responsible for distributing any year of death RMD prior to a direct rollover to another plan. If they overlook this and it is determined that an RMD was required, the RMD amount will have to be treated as a taxable distribution, and that same amount as an excess regular IRA contribution that will have to be corrected. The spouse may want to inquire about the RMD when requesting the direct rollover.