Spousal inherited 401k

Submitted by RONALD JACOBY on Tue, 2016-09-13 13:03

my wife died in 11/2011, we worked for the same company therefore having the same 401k investment firm but 2 separate accounts. wife dob 9/1947, my dob 6/1946. in 2011 the 401k inv. firm rolled my wife’s 401k balance into my account due to her death. I being 70.5 yo this year, will continue to work through the early part of 2017 to delay my 2016 RMD till 2017. Does the rolled over portion within my 401k plan from my deceased wife retain her DOB for RMD purposes or does my DOB rule for RMDs?

Have similar situations with traditional IRAs and Roth Ira, now spousal beneficiary IRAs, who’s DOB rules for RMDs?



Submitted by Alan - IRA critic on Wed, 2016-09-14 03:53

  • I think that your 401k account treats the entire balance as your own and none as a beneficiary, but you should stll verify that. Accordingly, your RMD would be based just on your DOB and the full plan balance. While this direct transfer is very rare, it is clear that you also could have rolled her plan to your own IRA and then rolled your IRA into the 401k plan. If the transfer was done directly, is probably only happened because both accounts are in the same 401k. In any event, it has been 5 years, so there should be no chance of any issues with the transfer popping up now.
  • Assuming you are NOT a 5% owner of the company, if you work into 2017 your first RMD distribution year will be 2017, but with a required beginning date of 4/1/2018. This gives you an option to defer all or part of your 2017 RMD into early 2018 if you wanted to. However, you will have to distribute your 2017 RMD before doing any IRA rollover in 2017. Your RMD divisor will be based on age 71.
  • For the inherited Roth IRA, you should roll that over to your own Roth ASAP. This Roth is qualified as it has been held over 5 years. There will be no RMDs required on the Roth, but if you take other distributions they will all be tax free.
  • For the inherited TIRA, you would need to take your first beneficiary RMD no later than 12/31/2018, the year she would have reached 70.5. You may want to get the rollover done with early in 2017 however, and you would have no 2017 RMD on that balance. Your 2018 RMD would be based on your age 72. If you also have your own TIRA or Roth IRAs, no reason not to combine them at the time you do the rollovers into your name.

Submitted by RONALD JACOBY on Wed, 2016-09-14 12:59

Alan, Thank you very much for this valuable information and you kindness in sharing your knowledge with me.  i will indeed use it.

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