Quick clarification on RMD after death of participant

[jkharvey]

We have a participant who died at age 72 and had already been taking RMD from the plan. The designated beneficiary is his spouse. Is this correct as to the options available for distribution of his remaining account:

1. The spouse beneficiary must take RMD in year of death.

2. In years after the year of death, the spouse may roll the account balance into her own IRA.

3. In years after the year of death, the spouse may leave the account balance in the plan (provided plan allows) and continue taking RMD each year.

4. If the spouse chooses to roll to her own IRA, the RMD could be delayed until the spouse reaches 70 1/2?

Am I missing something with this?

[ETA Consulting LLC]

1) Yes. Any remaining RMD that was already paid to the participant would be given to the Spouse prior to December 31st.

2) The spouse may roll "IMMEDIATELY" after taking the remaining RMD in step "1" above. If she crosses into another year, she would be required to take the RMD for that new year prior to rolling into her own account.

3) Yes.

4) Yes.

Missing something? No. However, if the surviving spouse is "older than the participant", then she may be better served by contining to take the RMD from the plan (or even rolling directly into an inherited IRA and continuing to satisfy the RMD based on the decedents life expectancy). But, like you clearly stated, if the spouse is not age 70 1/2, then immediately rolling over to "her own" IRA would cease any RMDs until she turns 70 1/2.

Good Luck!

[jkharvey]

One more question on this. If the spouse goes into a subsequent year and hasn't yet rolled out the money, is the RMD stll calculated as if it were the Participant receiving it or is it now on the spouse's life expectancy?

[ETA Consulting LLC]

No. It's calculated on the Participant "only in the year of death". In subsquent years, it's calculated on the longer of two life expectancies: 1) The participant's in the year of death minus 1 for each year; or 2) The surviving spouse's single life expectancy in the year of distribution.

Good Luck!