Spouse Beneficiary – 401(k)
401k participant, 73, died Oct 2021
Wasn’t taking RMD (non 5% owner’ using “still; working exception rule)
Surviving spouse, 63, 100% sole primary beneficiary
Its my understanding the surviving spouse..
(1) should have taken the deceased’s – 2021 RMD (by April 1 2022)
(2) can rollover the inherited 401(k) into an IRA (owner by her) due to her husband passing before his RBD. Moreover, she can defer RMDs until she reaches age 72
Whereas if death occurred on/after his RBD a rollover (to her own IRA would not be permitted). Instead, she would need to take RMDs (based on her LE; recalculated)
I am looking for confirmation. All guidance is appreciated
Permalink Submitted by David Mertz on Tue, 2022-05-10 19:48
There was no 2021 RMD needed from this 401(k) because the participant died before their required beginning date for RMDs.
Whether the participant died before or after their RBD, this surviving spouse can and should roll the inherited 401(k) over to her own IRA to delay and minimize RMDs.
Permalink Submitted by Alan - IRA critic on Tue, 2022-05-10 21:36
If the participant was still working under the still working RMD exception at the time of death, then participant passed prior to RBD and there is no 2021 year of death RMD due.
If participant instead passed on or after RBD, the surviving spouse could still do the spousal rollover, but there would be a year of death RMD due, required to be completed by the participant or the surviving spouse prior to doing a direct rollover of the balance. A beneficiary RMD would also be required for the year of the rollover, if done in a year after the year of death.
In this specfic case, in 2022 the surviving spouse might be able to elect the 5 year rule if the plan provisions permit, and directly rollover the entire plan balance to an owned IRA from which no RMDs are required until age 72. If the plan provisions require beneficiary LE RMDs (siince decedent has reached 72), then the plan would require the 2022 beneficiary RMD to be distributed and not included in the direct rollover.
Permalink Submitted by ShipsnGiggles on Wed, 2022-05-11 19:44
the option of rolling the 401(k) assets into an IRA owned by her whereby she can defer RMDs until she is age 72?
Permalink Submitted by Alan - IRA critic on Wed, 2022-05-11 22:37
There will be no owned IRA RMDs until she reaches 72. But there will be a 2022 beneficiary RMD using the single life table since participant was at least 72 this year UNLESS the plan provisions allow her to use the 10 year rule. That would eliminate the LE RMD for 2022 and the full balance could be rolled over to her IRA.