Owner of 401k dies without naming beneficiaries
Owner of 401k died without naming beneficiaries. No spouse. Owner’s Will names two daughters as Co-Executors and 50/50 beneficiaries of Estate. Plan Administrator (Fidelity) insists that Minimum Required Distribution based on deceased owner’s theoretical life expectancy must be taken. Is this correct? And if so, is the amount taxable at the Estate level or to the 50/50 beneficiaries if distributed to them?
Permalink Submitted by Alan - IRA critic on Thu, 2020-01-09 22:39
Owner must have passed after his RBD. Am surprised the plan has not told the executor they will be making a lump sum distribution to the estate. That could come at anytime. Whatever amount is distributed to the estate will either be taxed at the compressed estate rates or preferably be passed through to the estate beneficiaries and taxed at their individual rates. There is no way for the daughters to do a direct rollover to inherited IRAs, so the owner made a huge error in failing to name beneficiaries.