Permalink Submitted by Alan - IRA critic on Wed, 2024-09-25 16:41
The tax code allows this, but the plan might resist splitting direct rollovers in this manner.
But with Sec 327 of Secure 2.0 under which the beneficiary spouse can elect to be treated as the participant (for RMD purposes only), they would enjoy the benefits of splitting without having to do it. The 401k would not be subject to beneficiary (EDB) RMDs until the deceased spouse would have reached RMD age, all distributions would be free of penalty, and the Uniform Table would be used to calculate the RMDs.
The spousal rollover of that account to an IRA could be done as soon as the benefit of Sec 327 is no longer needed (such as penalty free distributions or RMD delay until deceased would have reached RMD age.)
Permalink Submitted by Alan - IRA critic on Wed, 2024-09-25 16:41
The tax code allows this, but the plan might resist splitting direct rollovers in this manner.
But with Sec 327 of Secure 2.0 under which the beneficiary spouse can elect to be treated as the participant (for RMD purposes only), they would enjoy the benefits of splitting without having to do it. The 401k would not be subject to beneficiary (EDB) RMDs until the deceased spouse would have reached RMD age, all distributions would be free of penalty, and the Uniform Table would be used to calculate the RMDs.
The spousal rollover of that account to an IRA could be done as soon as the benefit of Sec 327 is no longer needed (such as penalty free distributions or RMD delay until deceased would have reached RMD age.)