401k RMD for surviving spouse, sole beneficiary

[Janie]

Husband died in 2016 at age 76. Made RMD  in 2016 after death;  Wife stayed in 401K plan but just had name changed  from husband to wife (Age 72 at time of husbands death.)   Thought the transfer in wifes name would allow wife to continue to use the Uniform Life Table since wife was only beneficiary.   Principal Group handles the Plan and they are insisting that wife must take it using Single Life Expectancy.   I have been trying to get someone to listen to me that the Uniform Life Table should be used.    It appears that once the first RMD has been made as a “beneficiary” vs. surviving spouse, the wife will be stuck with the single life expectancy which is undesirable in this situation.  It appears that wife has no choice in 2017 RMD.    If the 401K is rolled over to an IRA, what table will be used in the IRA and can the IRA be treated as “wifes own”?  Please help….I am not a professional…just a fan of the website.   

[ETA Consulting LLC]

Is the account still in the husbands name with the wife as beneficiary?  If so, then you'd use the wife's single life expectancy (which gets recalculated each year).  

Now, if the wife were to actually rollover her husbands account into her own, then she'd use the Uniform Table.  This is, of course, assuming she is also an actual participant in the plan.

Good Luck!

[ESOP Guy]

2 hours ago, Janie said:

 It appears that once the first RMD has been made as a “beneficiary” vs. surviving spouse, the wife will be stuck with the single life expectancy which is undesirable in this situation.

This is the sentence I am stuck on.  What does this mean?  How the first payment was processed doesn't dictate how the following payments are processed.  She was either a spousal beneficiary or she wasn't and those facts plus the rules determine how she is paid. 

I am just guessing here but it almost sounds like some platform is saying they processed the payment the first year as if this person was not a spousal beneficiary and now that mistake dictates they get to keep getting to do it wrong year after year. 

What does that sentence mean? 

[Janie]

Wife was mislead to believe that once the 401K account was changed into her name that she owned it as her own.  But, we now find out that as long as it is in the 401K plan, she will be treated as a beneficiary.  And they are making her take the RMD for 2017 calculated as a beneficiary and not as a surviving spouse .  She has been told that even if she rolls it over to an IRA of her own, she will be required to use the beneficiary table (single life) verses the Uniform Lifetime table because she has taken a RMD as a beneficiary.   Ever heard of this?     

[card]

It is correct that whatever distribution she receives from the 401(k) plan will be as a surviving spouse beneficiary. But she has the same rollover rights as the participant would have had. So she can empty the account and directly roll over the entire distribution, minus the RMD for that year, into an IRA. She has the choice to roll over to an inherited IRA or to her own IRA. (She could even roll the dollars over to an inherited IRA and then at some later date treat that IRA as her own. There is no time limit for this election.)

If she rolls the distribution over to her own IRA, she uses the Uniform Lifetime Table when calculating subsequent RMDs from the IRA, the same as her other IRA dollars. I have great respect for Principal, but I don't know of any rule that says that a surviving spouse who receives an RMD from a 401(k) plan forever loses her full rollover rights with respect to all future distributions--including the right to roll over to her own IRA and use the ULT. You should ask Principal for the statutory/regulatory authority for their position.

usual disclaimers... not legal/tax advice, etc etc etc