RMD for Deceased 401k Owner
scenario: 401k owner, age 86, passed away on 10/17/2013. I’m not positive if he had taken his 2013 RMD, but let’s assume that he had. The 401k provider is indicating the non-spouse beneficiary will have to take a 2014 RMD, which appears to be based on the deceased owners life expectancy, before rolling over to an Inherited IRA.
If the 2013 RMD was satisfied for the deceased owner, wouldn’t the non-spouse beneficiary only need to take a 2014 RMD based on “his” age as of 12/31 for the year after death using the Single Life Table?
Permalink Submitted by mk foss on Fri, 2014-02-14 18:09
You are correct that the beneficiary need only take his own RMD based on his own life expectancy in 2014. If the decedent, in fact, missed his 2013 RMD – the beneficiary would take that also in 2014. For that one, you’d need to file Form 5329 for 2013 for a waiver of the 50% penalty. If the decedent did take his 2013 RMD, then the 2014 RMD based on the decedent’s age is not an RMD and could be rolled over.
Permalink Submitted by J LEWIS on Fri, 2014-02-14 18:15
thanks….that’s what I thought. The 401k provider gave us an RMD amount for the benefirciary (age 53) that was a third more the amount the decedent had to take in 2013. So unless the decedent did NOT take his 2013 RMD, the 401k providers calculation is incorrect. It appears to me the RMD amount for the beneficiary will be approx 1/2 of that which was required of the decedent.thanks again…
Permalink Submitted by Alan - IRA critic on Fri, 2014-02-14 19:00
There is a problem with doing any rollover of distributions in excess of the RMD because this is a non spouse beneficiary. Beneficiary should pursue the plan’s agreement to use the beneficiary’s life expectancy before authorizing any distribution or attempting a transfer to an inherited IRA which would trigger a 2014 RMD. I assume the non spouse beneficiary was designated and did not inherit the plan through the owner’s estate. Another possibility for the indication from the custodian is that they are combining decedent’s RMD for 2013 with beneficiary RMD for 2014 which would of course indicate that the 2013 RMD was not distributed by the decedent. In any event clarification should be secured before any distribution is taken.