IRA Beneficiary Question
Hello,
IRA beneficiary quest. Bob was 75 years old and passed away. His bene is a non-spouse designated bene who is subject to the 10-year rule. Bob had an IRA and a 401k. He was still working for the company with the 401k so he was not subject to RMDs in the 401k.
So for the IRA he died post-RBD… the bene must take RMDs in years 1-9.
However in the 401k he technically died pre-RMD since he died before April 1 of the year after the year he was required to take a 401k RMD. Does this mean that for the 401k balance, the bene can treat it as a pre-RBD death and would not have RMDs in years 1-9?
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2025-01-24 12:07
Yes. There are no RMDs in years 1-9 from the inherited 401k.
And if he wants to do a direct rollover to an inherited IRA, he should maintain that separately from the current inherited IRA in order to continue to avoid RMDs in years 1-9 for the prior 401k funds.
Of course, not taking any distributions prior to year 10 will result in a huge spike in taxable income in year 10.