Non spouse beneficiary Roth conversions!
Per attached article penned by Ed, Notice 2008-30 surprisingly allows for the non spouse beneficiary of a qualified plan to convert, whereas this is NOT possible for an inherited IRA.
http://www.financial-planning.com/asset/article/574771/time-convert.html
Permalink Submitted by Alan Spross on Sat, 2008-05-03 01:13
Attached is the Q&A from Notice 2008-30 that allows the non spouse beneficiary to directly transfer the interest to a Roth IRA:
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Q-7. Can beneficiaries make qualified rollover contributions to Roth IRAs?
A-7. Yes. In the case of a distribution from an eligible retirement plan other than
a Roth IRA, the MAGI and filing status of the beneficiary are used to determine eligibility
to make a qualified rollover contribution to a Roth IRA. Pursuant to § 402(c)(11), a plan
may but is not required to permit rollovers by nonspouse beneficiaries and a rollover by
a nonspouse beneficiary must be made by a direct trustee-to-trustee transfer. A
nonspouse beneficiary that is ineligible to make a qualified rollover contribution to a
Roth IRA may recharacterize the contribution pursuant to § 408A(d)(6). A surviving
spouse who makes a rollover to a Roth IRA may elect either to treat the Roth IRA as his
or her own or to establish the Roth IRA in the name of the decedent with the surviving
spouse as the beneficiary. (See Notice 2007-7, Q&A-13, for a rule on how to title a
beneficiary IRA.) A nonspouse beneficiary cannot elect to treat the Roth IRA as his or
her own. (See Notice 2007-7, Part V.)
In the case of a rollover where the beneficiary does not treat the Roth IRA as his
or her own, required minimum distributions from the Roth IRA are determined in
accordance with Notice 2007-7, Q&As -17, -18 and -19.
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