AJ North Posted January 30, 2013 Posted January 30, 2013 We have a terminated participant who turned 70.5 in 2012 and made a decision to defer their first RMD until April 1 2013. However, the participant died a few weeks ago. The sole beneficiary is the spouse who will turn 70.5 during 2013. My questions are; is this participant considered to have died before their RBD? Does the RMD scheduled to be paid out before April 1, 2013 still need to be paid and if yes, would the RMD be paid to the deceased participant or would it paid to the spouse beneficiary?
ETA Consulting LLC Posted January 30, 2013 Posted January 30, 2013 Yes. The participant has died before the RMD. There is no distribuiton due by April 1st. The spouse must receive the 1st distribution by December 31, 2014 (12/31 of the year containing the first anniversary of death since the participant has already turned age 70 1/2). Of course, the spouse may roll it over to their own account. Good Luck! CPC, QPA, QKA, TGPC, ERPA
AJ North Posted January 30, 2013 Author Posted January 30, 2013 Thank you for the response ETK. To follow up, the future distributions will be based on the spouses age only if they roll the deceased account over into an IRA or other retirement account (that are in the spouse's name). This is probably a moot point as the spouse has already attained age 70.5 and will need to begin RMDs either this year or defer until April 2014 If the spouse chooses to leave the money in the plan, they would have to continue to take RMDs based on either the deceased age or their combined ages. Have I got this right?
ETA Consulting LLC Posted January 30, 2013 Posted January 30, 2013 There is no comparision of life expectancies between the spouse and the decedant because the participant died prior to the required beginning date. So, no "longer of two life expectancies" provision being utilized. For 2014 and beyond, you are using the spouses "single life expectancy" as long as the account remains with her in beneficiary status (whether in the plan or rolled directly to an inherited IRA). Should the spouse roll into her own IRA, she's have the benefit of using the "uniform life expectancy"; which may have a significant impact. Good Luck! CPC, QPA, QKA, TGPC, ERPA
masteff Posted January 30, 2013 Posted January 30, 2013 IRS Publication 590, see the top of page 34 "Owner died before RBD". Also see bottom of same page, "Spouse as sole designated beneficiary". http://www.irs.gov/pub/irs-pdf/p590.pdf ETA Consulting LLC 1 Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
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