RMD Distribution to Spouse after Death

A participant in a 401k who is 76 years old died in 2018. The spouse was the primary beneficiary. She wants to rollover the funds into her own 401k plan and treat it as her own. As she is the spouse, I believe she can do that. However, the question is: does an RMD have to be done from the original 401k before the rollover?

Thank you.

If the RMD has not been made for 2018, he has a required RMD that must be paid.

If a non-5% owner the RBD is 4/1/2019.

While Mike's date is correct don't forget the first dollars paid from the plan has to be the RMD. 

My point was exactly the opposite, ESOP Guy.  The rules on compliance with a9 are completely different in the event of death before RBD. See 1.401(a)(9)-3.

Thanks Mike, you are correct. For some reason since he was 76 I just made the assumption that RMDs had been ongoing.

Would that first RMD be based on Single Life table?

No, the uniform life expectancy table (ULET) from the IRS, which assume a spouse no more than 10 years younger is applicable to all situations.  It made life much easier when introduced (final regulations issued in 2002 I believe).

For a beneficiary????

Let's try again. I think I got it right.

He died BEFORE his RBD because he was a less than 5% owner.  His RBD would have been 4/1 FOLLOWING his year of death.

She is the surviving spouse who is taking the funds into her own retirement account (whether plan or IRA) and we are talking about the distributions now from her account.  We are not talking about her as a beneficiary  (even a spouse beneficiary).  She is not an employee and cannot continue to defer distributions.

So now, those distributions would be MRDs during the "participant's life".   These are lifetime distributions, not death benefit distributions. She's NOT a beneficiary.

Lifetime distributions are computed the same way for most people.

Those distributions will be based on the Uniform Lifetime Table (which gives a better result than the Single Life Table).

So, do you agree? This stuff ain't easy, but it's hardest when you have to deal with post-death RMDs because then it depends on who is the beneficiary. As YOU pointed out, I don't think we have that here.

What do you think?

Larry.

I think I agree with card. Seems most consistent with -3 of the regs.

the question which has not been asked or answer is "was he employed at the time of his death?" The question infers he  was empoyed by calling him a participant. But I would want clarification rather than relying on semantics. If he was not an employee, when did he retire? was he a 5% or more owner?

If an RMD was due for 2018 because he retired in 2017, it must be taken out before the rollover. If the RMD rolls to her IRA, it could be treated as a contribution. if she is not eligible to contribute, or the RMD exceeds her contribution limit, she would have an excess contribution.

On 4/13/2018 at 6:53 PM, card said:

"Would that first RMD be based on Single Life table?"

There is no RMD in this situation. Since husband died before his RMD, there's no lifetime RMD required. Since spouse is rolling the funds over to her own 401(k) there's no RMD required to spouse as beneficiary (assuming she makes the rollover within 5 years after the participant's death).

She won't need to take RMDs from her 401(k) plan until she retires (unless she's a 5% owner).

 

Everything I said previously I believe is still correct.  When she takes and RMD, it will be on the uniform table.  HOWEVER, I did not discuss anything about WHEN she would take the RMD.  So, that will depend on her status (non-5% owner or not; 401(k) vs IRA; etc).  But WHENEVER she has to take an RMD, it will be an the uniform table, which was the question that Mike raised.  As I said, he died BEFORE his RBD, which does mean there is no RMD for him.  So I think we are all in agreement now.