Death before retirement date
78 yr old individual died in early 2021 while still employed. His wife was beneficiary of his 401k, and one of his TIRA’s. he had a small TIRA that the estate was beneficiary of. His wife rolled the 401k and TIRA account balance to her TIRA. As understand there is an RMD due based on the 401k balance as of 12-31-2020. My question is will the distribution of the small TIRA to the estate count toward RMD requirement?
Permalink Submitted by Alan - IRA critic on Fri, 2021-08-13 23:23
If he is not a >5% owner of the company that employed him, he passed prior to his RBD because of the “still working exception”. When a participant passes prior to RBD, there is no RMD due for that year, meaning that his wife could have rolled over the entire balance of the 401k.
If the small TIRA still exists, there is a 2021 RMD due for that IRA and the other IRA. If a distribution was made to the estate, that will cover the small IRA RMD, but not the other IRA RMD because the beneficiaries are different (estate for small IRA and wife for other IRA). For the other IRA was a distribution taken, or was it transferred to her IRA as a direct non reportable transfer? If a distribution was taken, it will satisfy the 2021 RMD for the larger IRA, but if that distribution was fully rolled over, the RMD portion of the distribution was not eligible for rollover. If the wife is executor of the estate and also the sole beneficiary, she needs to decide if the estate needs cash to cover expenses, or if the distribution is not needed for expenses. If not, she could assign the small IRA out of the estate to the estate beneficiary, and then that beneficiary could complete the RMD for the small IRA. So, naming no beneficiary on the small IRA may have been done for a purposes or it may have been an oversight that complicates things somewhat.
Permalink Submitted by Don Warnke on Tue, 2021-08-17 17:40
The 78 year old died after his retirement date not before, (my error).