Client dies at 70 1/2-Before RBD; Tiaa-Cref took out RMD

Submitted by Donald La Fronz on Thu, 2015-07-23 16:19

Hi,
I have a client who died at 70 1/2. Her RBD date would have been 04/01/2016. When I rolled her IRAs into her beneficiary’s IRA (her spouse), fidelity did not take out an RMD before transferring it. However, when I transferred her Tiaa-Cref balance into her spouses IRA, Tiaa-Cref took out an RMD before sending the check.
Is it possible that in an IRA it is not required, but in a QP it is required?

If possible, please shed some light.

thanks.



Submitted by Alan - IRA critic on Thu, 2015-07-23 17:21

No, the rules are the same. T/C made the error of treating this situation as if the participant still lived and did a rollover. An RMD would have been required in that case, however when the participant passes prior to the RBD, there is no year of death RMD. If 60 days has not yet elapsed since the client received the RMD check, the surviving spouse can roll it into the owned IRA account and report it as a rollover. Here is the IRS Reg for RMDs from DC plans, and there is no year of death RMD, so the Reg addresses RMDs for years thereafter:

(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.

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