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Ask the Experts December 13, 2011
(b)lines Ask the Experts – RMDs Continue in Beneficiary Accounts
December 13, 2011 (PLANSPONSOR (b)lines) – "My father passed away in 2011, and I am the beneficiary of his 403(b) account. He had begun receiving age 70 ½ required minimum distributions. The provider is telling me these distributions must continue even though the account is in my name. Is this true?"
Reported by PS
David Levine, Groom Law Group, answers:
Our condolences on your loss. The advice you have been given is generally correct. Once required minimum distributions have commenced to the participant under the Code section 401(a)(9) rules, they generally must continue to be made after the 403(b) account owner dies “at least as rapidly as under the method of distributions” already being used. (Different rules apply for surviving spouses.) You can refer to the participant’s distribution election form and the plan terms to determine what that is.
You should note that a required minimum distribution may also be payable for 2011 because your father had begun receiving required minimum distributions prior to 2011. In some cases, the plan may permit a faster distribution, in which case the beneficiary can receive an accelerated distribution which may in part be eligible for a non-spouse beneficiary rollover to an IRA. Even in that case, however, required minimum distributions must continue to be taken. Non-spouse beneficiary rollovers can be quite complex.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.