RBD for RMD after death of 73 yr old
Client dies at age 73 in 2008. Worked until death, therefore no RMD has been taken. Does RMD have to be taken in 2008 before the spouse, who is also 73, makes a IRA rollover from his 401k? Or can she rollover and elect to take RMD starting in 2009?
Also, if she leaves the money in the 401k does an RMD have to be taken in 2008 or can she defer to 2009?
Permalink Submitted by Alan Spross on Thu, 2008-10-09 22:53
Short answer, No.
If he had lived, retired, and wanted to rollover the balance in 2008 to his own IRA, the 2008 RMD would have to be withheld.
But the rules are different with respect to a sole spousal beneficiary when participant passed prior to his RBD. The surviving spouse has no RMD requirement for 2008 whether she leaves the plan intact or does a direct rollover to her own IRA. Therefore, she should do the rollover this year and in 2009 can begin RMDs using the Uniform Table. That would be a lower RMD than if she continued on the 401k plan as beneficiary.
Permalink Submitted by Larry Mullins on Thu, 2008-10-09 23:13
Thanks for the reply. This was my understanding also, however the plan administrator will not release the money for a rollover insisting that the RMD must occur first. They have been sitting on the request for several weeks while the market is tanking. Can you direct me to a source that I can refer to in discussing the situation with the plan administrator.
Permalink Submitted by Denise Appleby on Thu, 2008-10-09 23:58
See the discussion here
http://www.irahelp.com/phpBB/viewtopic.php?area=&t=424.
Different starting point, but same issue.
Permalink Submitted by Denise Appleby on Fri, 2008-10-10 00:14
I agree with Alan’s response. But, something to think about…You may end up going back and forth with the PA and still not change their minds. This issue was discussed at length on another message board. Some of the participants (in the discussion) are Pas and attorneys who are experts in the field, and they still couldn’t agree on the answer.
If she knows she is not required to take an RMD for this year and the PA says otherwise, then the question becomes, “should she have the PA send her a check for the RMD amount and rollover the balance to her IRA, and she can then rollover the amount she received within 60-days?” or , considering the discrepancy, does she want to err on the side of caution and go with the PA’s POV?
Permalink Submitted by Larry Mullins on Fri, 2008-10-10 00:45
Denise,
Thanks for the references. I read through them twice and may now be more confused than before. I think you are saying that she can rollover the entire amount if done so by Dec. 31 of the year of death(2008). She can then use 2009 as the RBD for the RMD. This is because she is electing the later of “the year following the date of death.” If I have this correct which part of the code should I refer to when discussing the issue with the plan administrator?
If this fails to convince the PA then we may have to go with your alternative suggestion.
Permalink Submitted by Alan Spross on Fri, 2008-10-10 02:20
Perhaps the following copied from the IRS Regs 1.401(a)(9)(5) applies to your request:
>>>>>>>>>>>>>>>>>>>
Q–5. For required minimum distributions after an employee’s death, what is the applicable distribution period?
A–5. (a) Death on or after the employee’s required beginning date. If an employee dies after distribution has begun as determined under A–6 of §1.401(a)(9)–2 (generally on or after the employee’s required beginning date), in order to satisfy section 401(a)(9)(B)(i), the applicable distribution period for distribution calendar years after the distribution calendar year containing the employee’s date of death is either—
(1) If the employee has a designated beneficiary as of the date determined under A–4 of §1.401(a)(9)–4, the longer of—
(i) The remaining life expectancy of the employee’s designated beneficiary determined in accordance with paragraph (c)(1) or (2) of this A–5; and
(ii) The remaining life expectancy of the employee determined in accordance with paragraph (c)(3) of this A–5; or
(2) If the employee does not have a designated beneficiary as of the date determined under A–4 of §1.401(a)(9)–4, the remaining life expectancy of the employee determined in accordance with paragraph (c)(3) of this A–5.
(b) Death before an employee’s required beginning date. If an employee dies before distribution has begun, as determined under A–5 of §1.401(a)(9)–2 (generally before the employee’s required beginning date), in order to satisfy section 401(a)(9)(B)(iii) or (iv) and the life expectancy rule described in A–1 of §1.401(a)(9)–3, the applicable distribution period for distribution calendar years after the distribution calendar year containing the employee’s date of death is determined in accordance with paragraph (c) of this A–5. See A–4 of §1.401(a)(9)–3 to determine when the 5-year rule in section 401(a)(9)(B)(ii) applies (e.g., there is no designated beneficiary or the 5-year rule is elected or specified by plan provision).
(c) Life expectancy—(1) Nonspouse designated beneficiary. Except as otherwise provided in paragraph (c)(2), the applicable distribution period measured by the beneficiary’s remaining life expectancy is determined using the beneficiary’s age as of the beneficiary’s birthday in the calendar year immediately following the calendar year of the employee’s death. In subsequent calendar years, the applicable distribution period is reduced by one for each calendar year that has elapsed after the calendar year immediately following the calendar year of the employee’s death.
(2) Spouse designated beneficiary. If the surviving spouse of the employee is the employee’s sole beneficiary, the applicable distribution period is measured by the surviving spouse’s life expectancy using the surviving spouse’s birthday for each distribution calendar year after the calendar year of the employee’s death up through the calendar year of the spouse’s death. For calendar years after the calendar year of the spouse’s death, the applicable distribution period is the life expectancy of the spouse using the age of the spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each calendar year that has elapsed after the calendar year of the spouse’s death.
>>>>>>> >>>>>>>>>>>