Beneficiary

[Guest stevena1]

Participant, John, dies before reaching age 70.5. Spouse, Mary, is beneficiary. Spouse wants account to stay in 401(k), but wants DOB changed in plan. Told spouse be happy to re-name account "Mary FBO John SMith" but will stay John's DOB.

Advisor suggests that Mary is new "owner" and funds can stay inside John's plan, and should change to HER DOB because she can take RMDs based on when SHE attains age 70.5.

Told Advisor I believe that is only if Mary transfers to IRA or Qualified Plan where she is participant...and that if $ stays in plan, Mary must take RMD based on John's DOB.

No "owner" of account inside plan except the trust...he was participant, she is beneficiary...she remains beneficiary.."account owner" rules pertaining to non qualified plan assets, etc..

Which is correct? (Advisor is very smart cookie and making me second guess myself!)

[Bird]

You're right. Unless the spouse rolls over to an IRA or a plan (presumably another plan in which she is a participant; I don't think your plan or any plan would allow an internal rollover unless the spouse/bene is actually a participant), the rule is that distributions must begin by the later of the end of the year following death or the end of the year in which the participant would have attained age 70 1/2.