Non-Spousal Rollover and the Transfer Limitation Rules
If I as a non-spouse beneficiary establishes a bene acct and moves the funds from custodian 1 (original holder) to custodian 2 (new brokerage acct), can I then move any or all of my IRA to my invesment of choice to custodian #3, for example a bank CD or Insurance company Annuity that is not held inside custodian #2’s acct? Does the establishment and original bene account at custodian#2 begin my limit me to a 1 year period? There seems to be much data on the limitaion rules and the non-spousal rules, but not much to discuss the combination of the two and what is availble contradicts itself.
Permalink Submitted by Alan Spross on Mon, 2010-01-04 18:39
This is fairly simple because a non spouse IRA beneficiary cannot do any rollovers at all, so there is no need to be concerned about the one rollover rule. There also is no limit to the number of direct trustee to trustee transfers that can be done with this account, or any portion of the account. Accordingly, you could have several different accounts properly registered showing your interest as a non spouse beneficiary. One could be held by a broker or mutual fund, one in a bank CD and another with an insurance company for an annuity product. The critical issue is that once you take a distribution, you have a permanent taxable event which cannot be erased. This is the leading cause of problems for non spouse beneficiaries, and some custodians are more anxious to distribute these funds than to retain them. Obviously, these accounts cannot grow through any new contributions.
The RMDs from these accounts can be aggregated since the accounts originate from the same IRA owner. That means that your annual RMD could be taken from just one of the accounts based on the total balance of all the accounts.