401K Beneficiary to Traditional IRA RMD requirement

Submitted by David Yeh on Tue, 2023-10-17 17:53

Hello,

Have a situation as follows:
1. Surviving Spouse received a 401K Beneficiary account after spouse died in 2022
2. Spouse had not taken previous year 2022 RMD.
3. This year 2023 did a distribution corresponding to the spouse 2022 RMD to satisfy that requirement and not incur the 50% penalty.
4. Rolled over the 401K Beneficiary account to the Surviving Spouse Traditional IRA. Not an Inherited IRA.
5. As part of rollover they do a distribution of the 2023 RMD before the rollover.
6. However the 2023 RMD distribution from the 401K was not the full amount due to the distribution of the spouse 2022 RMD that was done.

The 401K B RMD requirement comes off of the Single Life Table. Thus it is much higher than the Uniform Table requirement for a Traditional IRA for the surviving spouse.

To appropriately withdraw the correct remaining 2023 RMD for the surviving spouse should the total amount required be based off of the 401K B RMD requirement or the Traditional IRA RMD. Since the account is now it an IRA it is not clear which it should be.

Thanks for any clarification.

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Permalink Submitted by David Mertz on Tue, 2023-10-17 18:12

The 2023 beneficiary RMD is determined using the December 31, 2022 balance in the 401(k) and the surviving spouse’s age in 2023 with the Single Life expectancy table even though the year-of-death RMD from the 401(k) had not been completed. The portion of the 2023 beneficiary RMD for the 401(k) that was not completed before the rollover to the traditional IRA has become an excess contribution in the traditional IRA that must be corrected by a return of contribution.
The RMD for the traditional IRA, if any, is determined by the December 31, 2022 balance in the traditional IRA and the surviving spouse’s age in 2023 using the Uniform Lifetime table.