Stretch IRA for nonspousal beneficiaries on 403b
Clients relative passed away with a $600000 403b at TIAA-CREF. Nine beneficiaries were listed all nonspousal.
The client would like to transfer this to an inherited IRA. TIA-CREF says this is fine. All we need to do is open up an inherited IRA with TIAA-CREF and they will transfer it to new account?
Is it this simple with a 403b?
Does the current custodian of deceased account have to establish the inherited IRA for the transfer?
Permalink Submitted by Alan Spross on Tue, 2008-11-18 23:52
The non spousal rollover is still technically optional, so it is good that TIIA CREF is willing to do the transfers, particularly 9 of them.
If this is an RMD year for the deceased and the RMD is not yet satisfied, this needs to be distributed as well to the beneficiaries.
Each beneficiary would open their own propertly registered inherited IRA account showing both their beneficiary interest and the name of the decedent to receive the transfer. The plan administrator would not open these accounts. If each beneficiary will be allowed to use their own life expectancy, the transfer needs to be completed prior to the end of the year following the death of the plan owner.
What if the plan will only offer one transfer? In that case, plan B would call for the entire plan to be transferred to one inherited IRA account and further direct transfers from that IRA could be done for each of them.
If your client is coordinating this on behalf of the other 8 beneficiaries, he/she has an interesting challenge.
Permalink Submitted by Al Fry on Thu, 2008-11-20 18:50
Obviously, the benes can open the inherited IRA with anyone they choose, it does not have to be with TIAA-CREF.
Permalink Submitted by mk foss on Fri, 2008-11-21 02:21
Even if TIAA-CREF requires an account be established with their institution, the beneficiaries can go to the custodian of their choice, open a beneficiary account and have the new custodian request that the funds be wire transferred to the new beneficiary IRA.