Non-spouse Beneficiary IRA rollover from 401(k) plan
I know that the intent is now supposed to be that a non-spouse beneficiary can do a direct rollover into a beneficiary IRA and take distributions based upon their life expectancy.
I also know that there was an issue and the IRS said that they could not do this if the plan did not allow distributions based upon life expectancy.
As things currently stand, does a plan have to allow direct rollovers for non-spouse beneficiaries?
When the money is rolled over, does it still matter what the plan allowed?
Permalink Submitted by Al Fry on Thu, 2008-09-04 20:03
Even though a plan does not have to allow the direct rollover, it is my opinion any plan worth its salt would allow it. Why would they want to disadvantage benes of their employees? They can allow it without plan modification until 1-1-09.
Permalink Submitted by Alan Spross on Thu, 2008-09-04 23:08
In addition, if the funds are rolled after later than the end of the year following the employee’s death, the RMD provisions of the plan continue to apply, and not those of the IRA. Therefore, if a plan delays long enough before agreeing to the transfer, a beneficiary could still be stuck with the 5 year rule if the employee died prior to the RBD.
It does not help that Congress did not make the transfer mandatory, then the IRS ruled it mandatory before they ruled it optional. 🙂
Permalink Submitted by Al Fry on Fri, 2008-09-05 04:19
Sounds like our Presidential Candidates!