Death Beneficiary on 401k
We have a client (wife) who is currently 66 years old with a 401k account with a company and she is listed as a beneficial owner of the 401k plan. The husband died when he was 62 and he would be turning 70 this September. Our question is: if she were to rollover the funds into an IRA account, would she receive the RMD calculations and the ownership and control in her name?
Permalink Submitted by Alan - IRA critic on Mon, 2013-05-13 21:36
She could roll the balance over to either an inherited IRA or an owned IRA. If she maintains the inherited IRA, her first RMD would be for 2014. But if she rolls it to her own IRA, the first RMD year is the year she reaches 70.5. Since there is no advantage with this age mix to maintain an inherited IRA or inherited 401k plan, she should roll the balance over to her own IRA no later than the end of this year. Before acting, she should determine if there is any NUA potential from highly appreciated employer shares if she has not taken any prior 401k distributions.
Permalink Submitted by S Baukol on Tue, 2013-05-14 17:43
Thanks for your help! We appreciate it.