401(k) participant dies in 2019. First stretch not due until 12/31/2021, right?

Submitted by Robert Vashko on Tue, 2020-11-17 17:14

I saw an article by a very large financial services firm today that stated if you inherit a 401(k) in 2019, you must take your first stretch RMD by 12/31/20.

That’s not correct, is it? CARES’ waiver of all RMDs for 2020 means that the first stretch RMD does not have to be taken until 12/31/21, right?

This financial firm is very large and you wouldn’t expect them to muff something like this, so I just want to make sure I’m right and not missing anything.

Please and thanks.



Submitted by David Mertz on Tue, 2020-11-17 18:34

  • The article you saw was probably written prior to the CARES Act becoming law and was not later edited to reflect the new law.
  • The CARES Act waives the requirement for the beneficiary of an inherited retirement account take any RMD in 2020.
  • The waiving of the 2020 RMD does not change the calculation of the RMD for 2021.  The 2021 RMD would still be calculated the same way it would have been if 2020 RMDs were not waived, so the 2021 RMD is still the second stretch-year’s RMD even though there was no first stretch-year’s RMD.

Submitted by Robert Vashko on Tue, 2020-11-17 18:45

Thanks.  The article actually does make reference to CARES, which is why I was amazed that it still mentioned that the first RMD was due on 12/31/20.  Again, a big shop that you wouldn’t expect to be so sloppy.

Submitted by David Mertz on Tue, 2020-11-17 19:01

I think I found the article that you are referring to.  I think that the paragraph in question was updated to reflect the SECURE Act and they later just put a notice at the top of the article which was intended to imply that one should disregard the article with respect to 2020 RMDs.  But I agree, it does seem to be contradictory at first glance.

Submitted by Alan - IRA critic on Tue, 2020-11-17 19:57

As a side note, any owner delinquent RMDs as of 12/31/2019 including just the incomplete year of death RMD for 2019 decedents are still due in 2020 or late interest may still continue to accrue. For owners that reached 70.5 in 2019 but deferred the 2019 RMD to the RBD in 2020, that RMD is not treated as delinquent and the deferred portion is waived by CARES.

Submitted by Robert Vashko on Tue, 2020-11-17 22:51

Thanks to you both.  Always appreciate both of your responses.  Nice to know I’m not crazy.

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