401k death distribution, life insurance, RMD & 1099r

[SusanKD]

An HCE who was still employed died in 2012. His total plan assets are $2,000,000. He had a life insurance policy as part of his plan assets. He was also receiving RMD. Now in 2013 his spouse wants to rollover his death benefit. The total life insurance proceeds were $400,000. The cash surrender value was $225,000. So the non-taxable portion of the life insurance is $175,000. The spouse also has to receive a RMD for 2013 for $113,000. I know the 1099r code on the on the rollover will be 4G.

Since she's receiving $175,000 as a non-taxable distribution does she also need to receive the RMD as a separate taxable distribution? If not, would she receive 2 1099r forms? One for the RMD code 7 and one for the balance of the non-taxable life insurance code 4?

[Bird]

I don't think required minimums have to be taxable, so the tax free part would cover the RMD. I think you need one 1099-R coded 4G for the rollover, and one for $175,000 Code 4, with the taxable amount $0.

[mbozek]

There is an old PLR that allowed an RMD to be taken from AT funds distributed in that year so that the participant could roll all pre tax funds to an IRA.