Pension plan and Non-Spouse Beneficiary
Assuming that the plan will allow…….can a non-spouse beneficiary roll over a pension plan into an inherited IRA and stretch it out over beneficiaries life expectancy. The decedent is under RMD age.
Also the publication reference would also be greatly appreciated.
Thanks in advance.
Permalink Submitted by Alan Spross on Mon, 2010-10-25 18:38
Yes, this provision became effective in 2007 per the Pension Protection Act, link below. Scroll down to Sec 829 in the following link for the non spouse beneficiary rollover:
http://benefitslink.com/IRS/notice2007-7.pdf
This is also briefly covered on p 25 of Pub 590. Note that WRERA, signed in Dec,08 made these rollovers mandatory for employer plans beginning in 2010. It is important to complete the transfer by the end of the year following the year of plan owner’s death to assure that the beneficiary will be able to use life expectancy in cases where the plan required the 5 year rule to apply.
Also, note that a non spouse beneficiary can convert to an inherited Roth IRA, something an IRA non spouse beneficiary cannot do.