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Continuing RMDs after participant death?


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Retired participant had reached RBD in the later 20-teens and began taking RMDs on schedule. He passed away in 2021 and his wife elected to leave the funds in an account in the plan in her name until she could decide what to do with them. As she was not yet RMD age, she did not take RMDS in '21, '22, and 23. She is now 73 years of age and wants to roll her funds out of the plan into an IRA. 

We're of two minds on exactly which RMDs are missed. On one side, it is argued that only '21 is missed, as since he was in pay status that year's RMD should have still come out, and she'll need one '24 since she is now of RMD age. On the other side, it is argued that '21, '22, and '23 were all missed, as since he was in pay status at the time of his death in 2021.

Anyone feel particularly strongly about either side? The Plan Document does not appear to provide a definite answer to this specific situation.

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Is it possible the applicable plan was NOT amended to use the 72 and/or 73 ages for RBD?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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See Notice 2023-54, particularly the bit about guidance for plans that did not make a "specified" RMD.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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That's interesting, and resolves the immediate problem (thank you!) but the greater question I think persists. If a participant is in RMD pay status at the time of his/her death and the spouse doesn't remove the funds from the plan, would the RMDs cease until such time as the surviving spouse reaches their RBD or do they continue (recalculation or questions regarding the proper denominators notwithstanding)?

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If the participant died on or after his required beginning date, and the spouse beneficiary does not rollover the account to one she owns, RMDs start in the year following the participant's death and are based on the longer of their own life expectancy or the decedent's life expectancy, using the Single Life Table. Also, if not already taken by the participant, the spouse must take the RMD for the year of death, based on the participant's life expectancy using the Uniform Life Table unless the spouse is more than 10 years younger than the participant, in which the Joint and Last Survivor table would be used instead.

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On 3/18/2024 at 1:42 PM, C. B. Zeller said:

See Notice 2023-54, particularly the bit about guidance for plans that did not make a "specified" RMD.

This does not apply to her, because she is an eligible designated beneficiary.

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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