spousal rollover from qualified plan
Can a spouse who is in her forties roll her deceased husbands 401(k)monies directly to an inherited IRA in order to take advantge of accessing the money with out penalties? Her husband was in his 50’s when he died. If so is there a IRA reg that can be referenced?
Permalink Submitted by Alan Spross on Sat, 2007-09-29 05:00
Yes. She can do this thanks to PLR 2004 50057.
However, for some unexplained reason, this finding has not yet incorporated into the tax code, while the regulations from the non spouse transfer are being developed as a result of the later PPA passed last year. I believe that most custodians are not resisting the spousal transfer to an inherited IRA, so it should be easy to find one that will set up the inherited IRA. This should be done no later than 12/31 following the year of his death.
As an inherited IRA, she does not have to take any RMDs until the year her husband would have turned 70.5, but if she needs funds, she can take them without penalty. When she turns 59.5, she can then make the IRA her own. Depending on their exact age difference, she might have a couple years of RMDs before she hits 59.5.