Inherited 401k – Moving parts

Submitted by Corey Staub on Fri, 2024-02-02 16:50

Person in their 30’s inherits 401k from deceased aunt in 2023 who was 77. However the deceased was still working in 2023, and thus, not subject to RMD in 2023.

Note this person is more than 10 years younger than the deceased. She then transferred the 401k into an inherited IRA in 2023 (same year). Does the 10 year clock start ticking in the year of death? Was she subject to an RMD in 2023 since the deceased was of RMD age, even though the deceased was not subject to one because she was still working?

There are 2 opposing views from CPAs. thank you.



Submitted by David Mertz on Fri, 2024-02-02 18:08

  • Under the 10-year rule, for an IRA inherited from someone dying in 2023 the inherited IRA must be fully distributed by the end of 2033.  Because the decedent died before their required beginning date for RMDs, there are no annual RMDs.
  • There is no 2023 RMD because the decedent died before their required beginning date for RMDs due to at the time of their death still being employed by the employer that provided this plan.  Had there been an RMD for 2023 that had not been satisfied as of the date of death, that would have to have been distributed from the 401(k) before the remainder was rolled over to the inherited IRA and would have been income to the beneficiary in 2023, reported on a 2023 Form 1099-R.

Add new comment

Log in or register to post comments