Beneficiary Rollover

[JOH]

R ally quickly, sole spouse is the beneficiary of a qualified plan. Participant passes, the sole spouse wants to keep the funds in the plan (spoke with Plan Admin and they are okay with solo spouse staying in the plan). We are updating the titling to John Doe deceased FBO Jane Doe (she doesn't want to do an assumption b/c she is under 59.5). Here's the question, if we are re-titling the account as a decedent account, it's still considered a rollover and we have to report it on a 1099-R with a tax code "G" or maybe "G4"? Because she rolled it over to an IRA, 1099-R would be issued.

[ESOP Guy]

I don't see any reason to issue a 1099-R.  There hasn't been a distribution from the plan.   To me if the spouse is the beneficiary the money became hers when the participant died not when you changed the title on the account.   In fact since this is a qualified plan and not an IRA I don't think you have to do the whole John Doe deceased FBO.... stuff.   In these situations we simply changed the name on the account to Jane Doe.   We marked it was a spousal beneficiary and not a normal participant just so we knew and kept thing clear.