401k rollover for spouse

Submitted by Don Hutson on Mon, 2017-11-27 22:24

Client died in February 2017. DOB was August 1945. Client died after turning age 70 1/2, but prior to his required beginning date. Spouse is 100% beneficiary of the 401k account. Spouse notified the company of the owners death soon after his passing. In late November, client received two unsolicited checks from the 401k that approximate the distributions that would have been required had the client reached the required beginning date. The checks have not been cashed.

Spouse wants the option of rolling over the 401k to her individual IRA. Can she send the checks back to the company and still effect a rollover? If she cashes the checks, does she still have the option of rolling over the residual amount of the 401k to her IRA?

Thank you



Submitted by Alan - IRA critic on Mon, 2017-11-27 23:37

  • The plan erred in making those distributions, but if the checks were made out to the spouse as beneficiary she can simply roll them over to her own IRA within 60 days of receipt of the checks because the checks are not RMDs. This is easier than returning the checks, and waiting for a response. If these checks were considered to be  RMDs by the plan when issued there should have been no withholding, but if there was withholding she would have to come up with her own funds to replace the amount withheld and complete a full rollover. These transactions have no affect on her ability to do a direct rollover of the remainder of the plan to her own IRA (or to an inherited IRA if she is not yet 59.5).
  • If the checks were issued to the client due to a clerical error in recording his death, then she should call the plan and see if they will void the checks and restore the plan balance before doing a direct rollover of the rest of the plan. 

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