She is just listed as the beneficial interest, and her non spouse interest cannot be converted to an ownership interest in any type of retirement account. She can directly transfer the account to an inherited TIRA or an inherited Roth IRA (aka beneficiary IRA or BDA). In both cases she will have to take RMDs over her non recalculated single life expectancy.

It is vital here to get the transfer done prior to the end of the year following the year her son passed. If she does not and the plan required use of the 5 year rule if son passed prior to his RBD, then she is stuck with the 5 year rule. If the IRA transfer is done by the deadline, she can preserve her stretchout of the inherited IRA or Roth IRA.

Transfer of these funds needs to be done directly and a distribution check in her name cannot be rolled over and will become irrevocably taxable. This is by far the most common major error committed by non spouse beneficiaries.

She also needs to check on such things as potential NUA employer shares in the plan that should NOT be transferred to an IRA, and also the amount of any after tax contributions made to the plan that come out tax free on a pro rated basis with pre tax amounts. Knowing this balance would affect her inclination to convert any or all of the balance to an inherited Roth IRA vrs inherited TIRA.

You are correct that her RMD in the year of transfer must be distributed and cannot be transferred to an IRA. Beyond the RMD, the plan may offer flexible distribution options such that an IRA transfer is not critical, but she will find that an inherited IRA will provide more control and more options for her successor beneficiary, which she should name ASAP.

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