RMD for Beneficiary

If an active (not a 5% owner) participant is 80 years old and dies during the year, does the beneficiary have to take and RMD? The participant is of RMD age but was not required to take them as they were still actively employed.

First, consider what provisions the documents governing the plan state. RTFD, Read The Fabulous Documents.

But next, consider that a plan’s administrator often interprets a plan’s documents to anticipate provisions that might become retroactively applicable by a remedial amendment. RTFD, Read The Future Documents.

Further, some plans’ administrators interpret the current documents, the anticipated documents, or both not strictly for what either text states but rather for what makes sense to fit with the Internal Revenue Code and sensible interpretations of it, including the Treasury department’s legislative and interpretive rules (to the extent a rule is not contrary to law).

Yet, one should not discern a plan’s provision by looking only to the tax Code and regulations.

A required beginning date and a minimum distribution can vary not only with:

whether the plan mandates a distribution sooner than a § 401(a)(9) required beginning date.

whether the plan allows or precludes periodic payments;

whether the distribution is (or is not) an annuity, or life-expectancy payments;

whether the beneficiary is the participant’s surviving spouse or someone else;

whether the beneficiary is an eligible designated beneficiary;

but also with which optional provisions the plan states or omits (or is deemed to state or omit);

and which elections the plan permits or precludes.

26 C.F.R. § 1.401(a)(9)-3(c) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-3#p-1.401(a)(9)-3(c).

Remember, that a plan could state a provision without tax-disqualifying the plan does not by itself mean that the plan does have that provision.

This is not advice to anyone.