Jump to content

RMDs after death to parents(beneficiaries)


Recommended Posts

I have a combo 401(k) PS/CB. Owner died unexpectedly in December 2022 while in his 50's. He has no spouse, children, or completed beneficiary forms. His parents (in their late 70's) are the beneficiaries for both plans. There was some up in the air, but now both plans are being terminated. 

My question is on RMDs. Are the parents required to take RMDs from the plans due to their ages or not since the owner was not of RMD age? The plans should be paid out by the end of 2023 or early 2024. There will be required payments from the inherited IRAs, but that is outside the plans. I am more concerned that while the plans are open, the RMD rules are being followed. 

Link to comment
Share on other sites

No, RMDs are is based on the participant's RBD, not the beneficiary.

If you have a participant who dies before their RMDs begin you need to distribute over no more than 10 years (unless exception applies spouse or disabled qualifying for stretch) but I think you can take all out in the 10th year if you really want. If you have a participant who dies after RMDs begin, you still need to distribute over no more than 10 years but you also need take at least the RMD amount each year. IRS recently clarified that in a notice and granted penalty relief if you had not complied for certain years since it wasn't clear. Though I think that relief required you to make up the missed RMDs but I'd have to double check the notice.

I'm not sure what happens if say someone age 70 dies and the beneficiary is delaying under the 10 year rule what happens when the participant would have turned 73 and RMDs would have kicked in?  The IRS may have addressed that but I haven't had that situation come up so I haven't looked that closely.

 

Link to comment
Share on other sites

9 minutes ago, Lou S. said:

I'm not sure what happens if say someone age 70 dies and the beneficiary is delaying under the 10 year rule what happens when the participant would have turned 73 and RMDs would have kicked in?

I'm pretty sure it is simply the 10 year rule with no consideration to the participant's theoretical RBD.  I know I got quite a headache recently trying to sort our the old, new and newest rules.

Ed Snyder

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...