Death while working after 70.5
An employee a 40b plan I adminster passed away 11/15/2012. He turned 70.5 on 10/14/2012 but was still working and has no other retirement accounts but his 403b. The sole beneficiary is his wife and she would like to take out as little as allowed by law.
What has to happen to now?
Thanks in advance
Permalink Submitted by Alan - IRA critic on Thu, 2013-01-10 16:34
Nick, since he passed prior to his RBD, there is no RMD for 2012. If his wife is over 59.5, the plan should be rolled over to her own IRA and also if under 59.5 if she is SURE that she will not need funds prior to 59.5. However, since 2013 becomes an RMD year for her as 403b beneficiary, the plan must distribute her 2013 beneficiary RMD before she can roll the balance over to her own IRA. Starting with 2014, her IRA RMD will be based on IRA rules.
Permalink Submitted by Nick Pappas on Mon, 2013-01-14 16:31
She is 67. Does she have to take a 2013 RMD because she had a balance in a beneficiary 403b on 1/1/2013 or is there another reason? Would she use Singel Life Table and her age? Thanks
Permalink Submitted by Nick Pappas on Mon, 2013-01-14 16:31
She is 67. Does she have to take a 2013 RMD because she had a balance in a beneficiary 403b on 1/1/2013 or is there another reason? Would she use Singel Life Table and her age? Thanks
Permalink Submitted by Alan - IRA critic on Tue, 2013-01-15 00:24
Yes, the reason is that she must take a beneficiary RMD from the 403b in 2013 based on her life expectancy because her husband had reached 70.5. Had she rolled this over to an IRA before 1/1/2013 there would be no RMD required of her for 2012 or 2013. The plan administrator should not include her 2013 RMD in any IRA rollover. That 2013 RMD as beneficiary would be based on the plan 12/31/2012 balance, and the single life table using her age as of 12/31/2013.
Permalink Submitted by Allan Middleton on Tue, 2013-02-05 16:11
Would she be able to put off the RMD until December of 2013 and then roll the funds out to avoid a 2014 RMD? The plan has an high guarenteed account and she would like to leave the funds as long as possible while still avoiding a 2014 RMD. Thanks
Permalink Submitted by Alan - IRA critic on Tue, 2013-02-05 18:20
Yes, that would work. There is no RMD requirement until 12/31/2013.