RMD from plan with both platform and pooled funds

[pmacduff]

Plan has assets with one of the big 401k vendors as well as outside pooled managed funds.  Owner participant (who was already receiving RMDs, born in 1939) passes away.  Past RMDs have been calculated by the TPA on the entire balance and distributed from the pooled managed funds.  Spouse is the beneficiary and plans to roll the decedent's balance out of the plan to an IRA.   Vendor wants to process RMD prior to rollover.  Anyone ever been able to convince the vendor that the beneficiary can roll 100% of the account that they hold and the RMD will be made from the outside plan assets?  I would think that if the Trustee of the plan directed them to pay out 100% of the deceased participant's account to the beneficiary they would have to do that.  It will probably end up that the vendor will take the RMD anyway for their portion and then the TPA will calculate and have the Trustee pay the balance of the RMD from the pooled funds but it would be nice if the beneficiary only had to deal with one total RMD payout.   

[Bird]

It's really a matter of whether you want to beat your head against the wall that is the big 401k vendor. Obviously you can do what you suggest, but you have to find someone there who understands, which is the challenge. It might be as simple as checking a box saying the RMD was taken from other assets, or saying you'll do your own calcs but...it might not be that easy. It boils down to figuring out which is the least painful route.

[pmacduff]

Agreed, thanks Bird.  I think I just needed to vent about it in my frustration 😁

[CuseFan]

What about transferring the platform assets to the pooled account (after total RMD is calculated by TPA), and then paying the split lump sum (RMD/nonRMD) all from the pooled account, is that a viable option?

[pmacduff]

If I follow you, we'd be transferring the account to another investment within the plan, which should be allowed in theory. 

Thank you for the idea, unfortunately I think that would take as long or longer to accomplish that because the platform doesn't recognize that there are outside assets.   If they did I think they would allow us to roll 100% out without requiring the RMD to be withdrawn first.

Not a big deal really, it is what it is.  Just trying to make it easier on the beneficiary if I could at all.

 

[Lou S.]

Since the first distribution is supposed to be the RMD, why not take the whole 2023 RMD from the platform? Or is it the pooled potion hasn't yet been reconciled?

[pmacduff]

Hi Lou,

Yes - exactly - pooled aren't yet reconciled.