Under 59.5 Widow Inherits 401k and IRa
Under 59.5 widow has inherited her husband’s 401k and IRA, who died in 2021. She can do a lifetime beneficiary IRA instead of a spousal IRA, and avoid 10% penalty while under 59.5 correct? And her required withdrawals would begin when he would have turned RMD age?
Permalink Submitted by Alan - IRA critic on Mon, 2024-07-22 20:34
Yes, if she is the sole beneficiary of these plans, her beneficiary RMDs do not begin until the year husband would have reached RMD age. Once those beneficiary RMDs would begin and if she is then over 59.5, she can elect to assume ownership and the Uniform Table will apply reducing those future RMDs.
Per Sec 327 of Secure 2.0, she could also elect to be treated as the employee (owner) of the 401k, but only if the first year of beneficiary RMDs was 2024 or later. Plans may need some time to understand and adopt the proposed Secure 2.0 Regs which were just released last week. This would only matter if she wanted to continue the 401k as compared to a spousal rollover to an IRA.