Surviving spouse’s use of 60 day rollover on deceased 401k
Husband deceased in 2011 (age 80) and his 401k was retained by his wife as the primary beneficiary (also age 80 at the time). In 2016, the 401k was required to be completely distributed to the bank account on record and mandatory taxes withheld. (Side note: She appears to have been getting RMD from table 1 as a beneficiary as a spousal rollover was not performed.) The surviving spouse is wanting to exercise a 60-rollover however the distribution came from the deceased husband’s 401k and she’d like to roll it over to her Traditional IRA. She plans to deposit the full gross amount into her IRA in hopes of recovering the full amount withheld to the IRS. The 1099-R will be generated from the 401k and the 5498 will be generated on her IRA. Can she do this? Does this allow her to recover the taxes withheld?
Thank you in advance for your comments and knowledge.
Permalink Submitted by Alan - IRA critic on Thu, 2016-12-15 02:14
Yes, she can do a 60 day rollover to her own IRA account except for the portion of the 401k distribution which was the 2016 RMD. If she rolls over any of the RMD, it becomes an excess IRA contribution. By replacing the withholding she can complete the maximum portion of the distribution eligible for rollover. In 2017 her RMD will come from the IRA and will be lower because she can begin using the Uniform Table. Of course, the actual withholding will not be recovered until she gets her tax refund if she is overwithheld for 2016.