401(k) Issue
My 401(k) has my wife and son as beneficiaries (50% each). I am currently receiving my RMD as monthly deposits. Upon my death, will my wife and son have to report the after-death payments as income to them (50% each)? Also, my son does not have an IRA currently what is his best choice/options for his 50% inherited? Can he open an IRA and just put his name on the account so he will not have to report income until he retires?
Permalink Submitted by Alan - IRA critic on Sat, 2017-09-02 16:26
Your wife must have signed a waiver for allowing another beneficiary on the 401k. In any event, your wife will be able to roll her share over to HER OWN IRA account, whereas your son’s only option is a non spouse inherited IRA from which he will have to take annual taxable RMDs based on his single life expectancy. He must open an inherited IRA and complete the direct rollover no later than the end of the year following the year of your death to be sure that he can use his own life expectancy rather than the presumed shorted life expectancy of your wife.