RMD for deceased plan participant

[Egold]

Participant died in 2023.  He did not receive his 2023 RMD.

Who would receive the RMD.? Who pays the tax and receives the 1099?

[Peter Gulia]

Your query might lack some relevant information. Among other points:

Did the participant die before, on, or after the participant’s required beginning date?

Had a distribution begun?

If a distribution began, did it begin before, on, or after the participant’s required beginning date?

[Lou S.]

If he's been in pay status, that is this is not his first RMD, it will need to be made by 12/31 this year. As to who it is made to, there are some other threads on here if you search that tend to have 2 different conflicting answers.

The first answer is that it is payable to the participant's estate as it was owed to the participant as an RMD.

The 2nd answer is it is payable to the beneficiaries in proportion to their beneficiary percentage as it is a payment due from the Plan.

Which is the correct answer, I'm not really sure. Either way it is not eligible for rollover.

Now if he has not reached his RBD, I think you are looking at a different set of rules under the 401(a)(9) regs.

 

[Egold]

Thank you for your response.

Participant is the plan's owner. He was receiving RMD for many years.

His wife is the beneficiary. If she writes the check from the plan to herself,

who reports the tax? The dead spouse or the wife?

 

[Lou S.]

If the plan pays it to the spouse, the spouse should receive a 1099-R under her SSN from the Plan with Code 4 in Box 7.

Presumably if the Plan withholds taxes it would transmit that to the Fed/State timely, report it on the 1099-R and file any required year end Form such as 1096 and similar state forms. Though often with an owner RMD I see they elect no withholding and they just pay estimated taxes and 1099-R just shows the gross amount with no withholding.

 

[Paul I]

The spouse should seek some professional help for distribution and for tax-planning.  There likely is more than one alternative available to the spouse depending upon the spouse's age, the spouse's age relative to the participant's age, whether the spouse also is a participant in the plan, whether there are other non-spouse beneficiaries and other similar scenarios.

[Egold]

Thank You