Inherited 401(k) RMD?
Client passed away in Sept 2023 at age 71. She would have been age 72 by the end of 2023 (November date of birth). Her daughter (age 35) was the 100% primary beneficiary. An inherited IRA has been opened for the daughter. The 401(k) record keeper is saying that a 2024 RMD must be withdrawn and paid to the decedent’s estate prior to transfer of the plan to the daughter’s inherited IRA. #1) I see no reason why an RMD would be due to the estate, correct? #2) I don’t even believe the daughter will have a 2024 RMD since her mother passed away prior to age 73, correct?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2024-01-03 20:53
Yes, you are correct on both issues. Sounds like an inexperienced plan administrator. Daughter should complete a direct rollover to an inherited IRA before year end 2024 to eliminate the chance that this plan still has a 5 year rule in place, and there should be no distribution required before the direct rollover because the participant passed prior to RBD. The inherited IRA will be subject to the 10 year rule but with no annual RMDs.