Disclaimer by Spouse of Deceased Participant
Revenue Ruling 2005-36 provides info for a “qualified disclaimer ” by a spouse of a deceased participant of an IRA even thou the RMD was taken by the spouse in the year of death. Does anyone know if the same rules would apply to a qualified profit sharing plan instead of an IRA?
Permalink Submitted by Alan Spross on Tue, 2011-02-15 23:14
Unless there has been another decision since then, 2005-36 is strictly limited to IRA accounts.
No telling why is was not expanded to qualified employer plans, but the number of these that remain in place after the RBD are few in number compared to IRAs. The RBD itself is delayed if the employee is still working and the majority of these plans are rolled to IRAs after retirement, so relatively few plan owners pass prior to the plan being rolled to an IRA AND after their RBD. It’s a smaller window compared to IRA accounts. These RRs often result from several PLR requests, and it could be that all the requests were for IRAs. Just speculating, since there is no reason that an employer plan should not offer the same option, but it was not accorded that by RR 2005-36.
Permalink Submitted by mk foss on Wed, 2011-02-16 01:24
A qualified disclaimer has a requirement that the person who is disclaiming has not received any benefits from the asset disclaimed before the disclaimer. Before this Revenue ruling it wasn’t clear that taking the decedent’s RMD was not “accepting the interest or its benefits” as mentioned in Section 2518. Rev Rul 2005-36 clarified that the decedent’s IRA RMD was not a receipt of the interest or tis benefits – so the disclaimer worked.
The same rule should apply when the RMD is from a profit sharing plan. There are rulings for qualified plans that we apply to IRAs and I would be comfortable in assuming that the same rule would apply for qualified plans.