Participant dies and beneficiaries are sisters

Hi

I was asked the following (not sure if a DC plan or 403(b)).

Not sure if the deceased was already receiving RMD and do not know the ages of the beneficiaries.

Assuming that the sisters get the amounts this year and rollover into their IRA's

Q1: I do not think they need to get an RMD for 2020, correct?

Q2: They need to distribute the IRAs and taxed on within 5 or 10 years?

Q3: When will year 1 start?

Thank you

Don't you need to first determine the answers to your "not sure" statements?

Trying to get to Q1. How about Q2 and Q3, in general terms?

Thank you

Assuming he died in 2020 and not a prior year...

Q1 - If it is a DC Plan then no RMD is required for 2020.

Q2 - 10 years for non-spouse death payouts under Secure act.

Q3 - the 10 year period starts in the year following death so year one of ten is 2021.

Lou S., thank you

One follow up to Q3 - does it matter if the beneficiary receives the rollover in 2020?

Under Secure my understanding is the 10 payout year period starts in the year following death.

If  they want to rollover in 2021 RMDs might again apply prior to the rollover depending on the age of the participant since the CARES exemption to RMDs will no longer apply.

But you can double check the Secure Act.

The rollover will be in 2020 however thank you for your time/comments.

On 12/3/2020 at 12:20 PM, Jakyasar said:

Hi

I was asked the following (not sure if a DC plan or 403(b)).

Not sure if the deceased was already receiving RMD and do not know the ages of the beneficiaries.

Assuming that the sisters get the amounts this year and rollover into their IRA's

Q1: I do not think they need to get an RMD for 2020, correct?

Q2: They need to distribute the IRAs and taxed on within 5 or 10 years?

Q3: When will year 1 start?

Thank you

What do you mean by "get the amounts"? Did they inherit the account this year? or, are they rolling over the amount this year? The answer to Q2 and Q3 depends on the answer to that question.

You also need to know the sister's ages , so as to determine the options available to them. And, depending on their ages and when the owner died, you might need to know is separating occurred timely - allowing them to use their individual life expectancies .

You might want to consult with an advisor who is an expert in this area. Mistakes can be costly.

Appleby

They inherited in 2020 and also received the assets in 2020.

My understanding from other comments and reading further, it is 10 years and starts in 2021.

As to the ages, still no info so Q1 is out.

Thank you for your time.